Message Font: Serif | Sans-Serif
No. of Recommendations: 1
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.

Print the post  


In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.