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Author: SirTas Big gold star, 5000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121219  
Subject: Re: Last minute year end question Date: 12/29/2008 9:31 PM
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OK, just for the sake of argument, let's say somebody had some losses this year in their portfolio. ;)

Now let's say that they have realized some of those losses, and are sitting with several thousands of dollars in "tax loss" selling for the year.

Further, let's say that they have many things in their portfolio which are still above water, in some cases well above water.

Why would that person not want to sell those issues with gains - to match against the losses - and then (presumably) buy them back in 31 days, increasing their "cost basis" so that at some point in the future when they are sold there will be less tax on them?

(I know you can carry forward, or use up to $3000 against "other income", but my question is: why not do it now? What is the downside to matching up gains and losses today instead of at some hypothetical date in the future?)


Let's say that scenario #1 is the case in which you sell some winner stocks to offset these losses, and scenario #2 is the case in which you simply hold on to those winner stocks and use $3000 of the capital loss to offset income. Assuming -- for the sake of this argument -- that tax laws remain the same, isn't the main point that scenario #1 would save you fewer dollars than scenario #2?

It seems, in fact, that if one has capital losses and unrealized capital gains from stocks, then it's always in one's interest to use the losses to offset ordinary income.

--SirTas
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