The question is, my k-1 profit statement from my S-corp might say when I issue it, -$120,000. Absent anything else, I can carry that amount back or forward to reduce my ordinary income that I pay a marginal rate of 30% or whatever, saving me about $36,000 in taxes (.3*120k).
If, however, I take a $120,000 capital gain this year, and pay no tax on it because my AGI is 0 and the cap gains rate for single people with AGI of less than $39,000 is 0%. So I save $18,000 on capital gains taxes.
The question is, do I lose the ordinary income carryback/carryforward worth $36,000 because my 2017 reported AGI is 0, not -$120,000?
That seems kind of illogical since the rule for capital losses is that only $3,000 against ordinary income per year. But I want to use my ordinary losses against ordinary income, not same-year capital gains.
My hope is that my bad year for my S-Corp day job will let me do both, avoid about $18,000 in capital gains taxes by having a low income, but also avoid $36,000 in taxes on ordinary income from loss carryback and forward.
I am kind of worried about doing a carryback since that would involve me not paying less taxes, but asking the government to give me back taxes I paid in the past. I’d also need to refile tax returns. It seems safe and easier to just carry forward. Looks like I don’t have to decide until I do my 2018 taxes, though the carryback option is attractive in allowing me to get a bunch of money early in 2018.
