My question is about capital gains and offsetting them with losses. All my gains and losses are short term. I do not invest for the long term
I understand how this works for 1 calendar year. For example, let's say in the past year I bought and sold stocks/options and on some of those trades I made a $50,000 profit. Some of those trades didn't work out and I lost $30,000. Assuming I don't have any wash-rule adjustments, I would owe taxes on $20,000 gains.
Now the part that I do not understand. Let's assume that from 2017 to 2022, I lost money in the markets every year for a total loss of $100,000 Since I did not make any money in the markets all those years each year I can deduct $3000 from my income when I do my taxes. So after six years of deducting $3000 from my income my carryover loss remaining coming into 2023 would be $82,000.
Let's say 2023 was a banner year and I made $100,000 in profits in the markets. Sorry for the long winded question, but I need to be as clear as possible Since I have $82,000 carryover losses from the past and I made $100,000 in 2023, does this mean I owe taxes on only $18,000 gain for 2023 tax year and my carryover loss is now zero
Thanks
