about 10 years ago, i lost big on stocks. I could only use 3k losses every year, but had forgotten to do it on my taxes after the first year. I am expecting a large bonus this year, can i retroactively use the losses that were used vs the bonus received this year?
You can amend the tax returns for the prior years that you didn't take the $3K deduction on but you can't apply capital losses (stock) directly against orginary income (bonuses). However, there may be other ways of repositioning the income and loss sources to accomplish what you're looking for. Holler if you want to discuss further.
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The problem is that a bonus, even if it is stock, will be treated initially as ordinary income as it is earnings. Once it is taxed as ordinary income upon receipt, it becomes a capital asset with a basis equal to the amount of ordinary income recognized. If it increases after that point, the gains will be capital and can be offset by the losses. But Section 83 of the Internal Revenue Code basically makes the receipt of property for services ordinary income, even if it is stock.
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First you can only amend open years, generally 3 years, to apply the carryover. Second, for this year the year end bonus is ordinary income so the most it could be offset by is $3,000 of capital losses.
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