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"I have a large long term gain."

Congratulations!

"Someone suggested to me that if I have any stock I'm unhapy with, the loss on selling it would offset the capital gain."

True. And if you are going to do the selling to offset a gain for 2000 tax purposes, you gotta do it this week.

" Here is my question:
If I take the ST loss, I post it against the LT gain, reducing my taxes, but the tax rate is the lower 20% rate."

That is, the tax rate on the long term gain. Correct.

"If I wait and take the loss next year, it can be taken against ordinary income at the associated higher tax rates (I don't typically have a large LT gain)."

Assuming you don't have capital gains, particularly long term ones, next year, true.

"I think the long term prospects for the stock are no longer positive, but I think the market has over-reacted to bad news and the stock will have some gain in the next few months. I don't know if I should take my chances or take my lumps. I've lost 70% of the value already, so there isn't that much more downside risk."

Depends how much you need the cash to pay the tax on the gain you already have. Also you might have to increase withholding next year or pay quarterly estimates. I think you are correct and that you well may be able to sell your stock next week for a better price.
There is value in not having to pay a tax NOW. For this reason one might want to sacrifice the chance to write off the loss against ordinary income or against a short term gain, to reduce 2000 taxes. It is also possible that the stock might do well and you might not have a loss at all.

"On another post, some said that there is never a reason to postpone a loss. Would this be an exception or am I better off taking the loss this year?"

I think it said there is never a tax reason to let a loss become long term. This is a different point completely. Short term losses are first written off against short term gains, which are taxed the same as ordinary income. If a loss becomes long term, it is first written off against the long term gains, which are taxed at 20%, possibly less. Now, if you think prospects for the company are improving, or you think next year you won't have long term gains and you'd rather pay tax on them at 20%, that is an investment decision. Different kettle of fish.

Your call, and good luck!
Chris
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