@mistymoney, you can only use $3K of excess capital losses against ordinary income.
However, any unused excess capital losses carry forward and can offset capital gains in those future years to an unlimited degree (until you die). So a $500K gain and a $600K loss this year would result in a $100K loss carryforward, and a $100K gain next year would be absorbed entirely by the $100K loss carryforward.
Also, all gains and losses offset each other, so you can have a $1M gain and a $1M loss in a single year and that's fine (and zero tax impact).
Bolded a word.
I normally like to remind folks that it is not optional. You realize gains and have realized losses (new or carryover), those losses will be used.
I have found the wording is difficult to express properly. Can, will, shall, it gets a little clunky. Regardless, there are no choices to be made when filling out one’s taxes.
I understand your point. I was mainly trying to help the OP understand a bit more about how it works.
You're right that if you have a carryforward loss and ordinary income that can be offset by that loss, you must offset if you can. You're not given the option to "save" the carryforward loss for a future year where it could be more beneficial.
However, as usual there is even more nuance. If you have a carryforward loss and your income in the next year is low enough, the carryforward loss is not used up. I had this scenario happen with my kids who realized a capital loss in their UTMA accounts when they were young, then didn't earn enough to where the carryforward was used up until eight or ten tax years later.
As to your last sentence, it's true with respect to whether you must use up carryforward losses if you can. But there are many other places in the tax code where you get to make decisions, so it's not a true statement in the general sense.