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Financial Planning / Tax Strategies


Subject:  Capital Loss Deduction and Strategy? Date:  4/18/2000  10:44 AM
Author:  KnowFoolishness Number:  34687 of 127745

For those of you that may be experts in the areas of capital losses and investment strategies, here is a question I have recently been mulling over. Given that you can deduct up to $2000 per year due to capital losses, for those that can afford it, wouldn't it makes sense to take at least $2000 per year to invest in a high risk portfolio? It seems to me that this greatly reduces risk because you are guaranteed (and this is the area I am trying to confirm) to not lose all of this money due to the fact that even a complete loss of this investment will reduce your AGI by $2000, which, in turn, will result in less taxes owed or a greater refund. Obviously, the impact and the efficacy of this approach depends upon your tax bracket.
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