I The irs has specific rules on how stock losses can be used to lower your income tax bill when you file your return ;you need to have realized loss; "realized" losses and gains refer to investment losses or profits that can be used on your taxes. A loss on stock is not realized unless you have sold the shares. a drop in an investment’s value below its purchase price does not qualify for this deduction. The loss must be realized through the asset’s sale or exchange. Capital losses from the sale of stock are claimed on form 8949/ Sch D, which is attached to your Form 1040 tax return. Capital losses offset capital gains of the same type, then capital gains of the other type, and then other income. So, if your stock loss is a short-term loss, it first offsets your short-term gains for the year. Any remaining short-term loss would then be used to offset long-term gains. Finally, if your loss from the sale of stock was greater than the total of your combined long- and short-term capital gains, up to $3K, as you can see, in capital loss can be used as a deduction against other income. The loss can be used against capital gains and up to $3Kof other income each year until the entire loss has been used to reduce your taxable income and income taxes for the year.
I trade the stock market and have large losses that have accrued over the years that I would like to take as a lump sum instead of stretching it out over several years. At the $3,000 per year rate I have looses that will take the next 15 years to write off.