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The best solution is probably to do nothing - you don't have any gains to pay taxes on. You have a loss, and that's not such a bad thing at tax time, because losses (up to $3000) will offset your ordinary income, which is taxed at a relatively high rate. Any unused losses (that is, losses beyond $3000) will carry ahead to the following year, to be used against future gains or future ordinary income. The last thing you want to do is to take a long term gain (which is taxed at a relatively low rate) simply to offset a short term loss. That's throwing money away.

You need to track down, read, and understand ptheland's article on how short and long term gains net together, and how capital gains in general work. You'll find it somewhere over there -> to the right.

And as someone is sure to tell you, you don't generally want to make investment decisions for tax reasons. Make investment decisions for investment reasons.

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