What is Jordan's capital loss carryover to 2018 if his taxable income includes various capital losses?

To determine Jordan's capital loss carryover to 2018, it's important to understand the rules that govern capital losses in tax reporting. Taxpayers can offset capital gains with capital losses, and if capital losses exceed capital gains, they can claim a net capital loss deduction against ordinary income, but only up to a limit of $3,000 per year for individuals.

If Jordan had a capital loss greater than his capital gains and was unable to fully utilize that loss in the year it was incurred, the excess amount can be carried over to subsequent tax years. Any amount that exceeds the $3,000 deduction limit can be carried forward to future tax years until it is entirely used up.

In this situation, if he has total capital losses of $11,000 and he only could take $3,000 in the current tax year, this leaves him with an unused capital loss of $8,000 to carry over to the next year (2018). This amount can be used in future tax years until it is absorbed against capital gains or ordinary income in those years. This aligns with the general tax principle of allowing losses to be carried over to ensure taxpayers aren’t permanently taxed on losses that exceed their gains.

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