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Financial Planning / Tax Strategies


Subject:  Re: Managing Year-End Capital Losses Date:  12/17/2001  9:44 PM
Author:  TrevorJ Number:  56089 of 127613

Thanks, David, Peter, and Lokicious for your thoughtful replies. Here's my conclusion on the subject of taking year-end losses:

1. It makes sense under certain circumstances to offset gains for the tax year by taking losses up to the limit of the $3,000 offsetable against income each year.

2. It needs to be done by either selling stocks which you want to dump anyway, or managing a swap with similar, but not substantialy identical, stock (so as to avoid a wash sale), yet maintain portfolio balance.

3. The benefit of the latter may be relatively small, since you will have a lower basis in any replacement stock, which will eventually catch up with you.

4. Beyond the $3,000 there is absolutely NO benefit in creating a loss to carry forward to future years, unless you specifically want to get out of your position anyway.

My intention now is to do nothing, since I have (unfortunately) already more than offset my gains for the year!

Thanks again.

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