Tax loss carryforward
A tax loss carryforward lets you use an investment loss you couldn't use this year to cut your taxes in later years.
🌍 In the real world
Losses first cancel out gains in the same year. In the US, if losses are bigger than gains, up to $3,000 a year of the net loss can reduce other income, and the rest carries forward to future years with no time limit.
Businesses can carry forward operating losses too, so a company that loses money one year pays less tax once it becomes profitable.
Example
Lose $10,000 on stocks with no gains: $3,000 reduces this year's income and $7,000 carries forward to next year.
🎮 In Journey Shares
Losses cancel gains within the week. Up to $57.69 a week of a net loss reduces your taxable income (the real $3,000 a year spread over 52 weeks), and the rest carries forward to later weeks. →
🧭 How to use it
A bad week still counts for tax: a net loss lowers what you owe later. Just don't sell and buy the same person back within about 14 hours, or the wash sale rule moves the loss into your new shares instead.
🎮 Learn Tax loss carryforward the fun way
Try it in a live 3D city with play money: trade shares in real public figures, get margin-called, pay your taxes and rob a bot or two. Free, and nothing real is at stake.
❓ Common questions
Does a loss carryforward expire?
For US individuals, capital loss carryovers don't expire during the taxpayer's lifetime.
Why only $3,000 a year against other income?
Congress limits it so large investment losses can't wipe out tax on wages. The limit has been $3,000 since 1978.
📜 Where it came from
🔗 Related terms
- Capital gains tax: Capital gains tax is tax on the profit from selling an investment for more than you paid.
- Capital gain: A capital gain is the profit from selling an investment for more than you paid for it; selling for less is a capital loss.
- Wash sale rule: The wash sale rule stops you from claiming a tax loss if you buy the same or a substantially identical investment within 30 days before or after selling it at a loss.
- Cost basis: Cost basis is what you paid for an investment, including fees, used to work out your gain or loss when you sell.
Categories: Taxes
Practise with $10,000 in play money
Free. No real money involved.