Loss Carryforward for a Child

[CarolToppCPA]

A child, age 14 in 2007, had a capital loss of $1,500. Only other income was $300 interest. I filed a return to capture the loss.
In 2008, she had interest of $200 and a cap gain of $320. No return was filed.
Now in 2009, interest of $240 and another capital loss of $940.

A fellow CPA told me I should have filed in 2008 to maintain the loss carryforward. But then the loss would be reduced by the cap gain of $320 that year. Right?

What do you think? Do I need to file the 2008 return?

What's her new loss carryforward? Add just the two losses? Or include the cap gain from 2008 of $320?

[Dusty2004]

Amend

A child, age 14 in 2007, had a capital loss of $1,500. Only other income was $300 interest. I filed a return to capture the loss.
In 2008, she had interest of $200 and a cap gain of $320. No return was filed.
Now in 2009, interest of $240 and another capital loss of $940.

A fellow CPA told me I should have filed in 2008 to maintain the loss carryforward. But then the loss would be reduced by the cap gain of $320 that year. Right?

What do you think? Do I need to file the 2008 return?

What's her new loss carryforward? Add just the two losses? Or include the cap gain from 2008 of $320?

Carol:

If you have a capital loss and their taxable income is 0 then you use up 0 of the loss and it is all carried over.

I was always taught (do not have a reference) that you have to file a return each year to carry the loss forward.

Dusty

[ChEAr$]

There is no reason to have had to file a 2008 return. However since that year's capital gain
is canceled by the loss carryover, be sure to bring to 2009 THE correct figure as if the 2008
return had been filed.

[gkaiseril]

A child, age 14 in 2007, had a capital loss of $1,500. Only other income was $300 interest. I filed a return to capture the loss.
In 2008, she had interest of $200 and a cap gain of $320. No return was filed.
Now in 2009, interest of $240 and another capital loss of $940.

A fellow CPA told me I should have filed in 2008 to maintain the loss carry forward. But then the loss would be reduced by the cap gain of $320 that year. Right?

What do you think? Do I need to file the 2008 return?

What's her new loss carry forward? Add just the two losses? Or include the cap gain from 2008 of $320?

See page 67 of IRS Pub 550 it explains about computing the loss carry forward. You can either file a return or you will need to compute the yearly adjustment for each year a return is not done and determine what the carry forward would have been if a return had been filed. So you only need to do long term carray forward worksheet each year to document the needed adjustment.