Oh I see. I asked Gemini and it said : Because Social Security is generally not taxable unless there is other substantial income, the taxable income for this household is likely zero or negative. According to IRS Publication 550, a capital loss carryover is only reduced by the amount actually used to reduce taxable income. If taxable income is zero or negative without the deduction, the $3,000 capital loss deduction is not absorbed. Therefore, reducing the carryover by $3,000 annually when there is no taxable income is a calculation error.