What's the point of TLH when you already have booked losses?

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Jebediah
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What's the point of TLH when you already have booked losses?

Post by Jebediah » Fri May 15, 2020 9:34 am

Suppose I have 100K in carryover capital losses and a fund with 10K of unrealized losses. Is there any point to TLHing that fund to realize the loss? Why not just let it exist unrealized?

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Re: What's the point of TLH when you already have booked losses?

Post by jebmke » Fri May 15, 2020 9:47 am

I had a lot more than that after the great TLH season of '08-09 and I eventually used them up re-balancing through the recovery.
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Re: What's the point of TLH when you already have booked losses?

Post by firebirdparts » Fri May 15, 2020 10:15 am

I guess it depends. If you are the kind of person to have 100k capital gains sometime in the reasonable future, then you could imagine using that up. Are you that kind of person?
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Re: What's the point of TLH when you already have booked losses?

Post by livesoft » Fri May 15, 2020 10:16 am

One point is to avoid loss aversion.

Another point is to allow for uncloudy thinking in the future if one wishes to sell something at a gain. One won't have think, "Oh, the taxes are going to kill me."
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Re: What's the point of TLH when you already have booked losses?

Post by zonto » Fri May 15, 2020 10:52 am

What's the point of not harvesting more losses? Only one I can think of is wanting to leave assets to your heirs with a higher basis.

Otherwise, might as well harvest to offset future gains as others have stated. Could be a boon decades from now when withdrawing from the portfolio or wanting to rebalance.
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Re: What's the point of TLH when you already have booked losses?

Post by Jebediah » Fri May 15, 2020 11:12 am

The point of leaving it unrealized is not having to transact if you don't have to.

If/when the asset class gains 10K in the future, it'll just offset the loss I took.

If I didn't have a stockpile of losses to use, then it makes sense to realize the loss. Otherwise, I still don't see a financial benefit. The idea of psych/cognitive benefits is interesting, thanks Livesoft

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Re: What's the point of TLH when you already have booked losses?

Post by jebmke » Fri May 15, 2020 11:32 am

The cost to do TLH with a major fund family like VG or Fidelity is effectively zero.
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Re: What's the point of TLH when you already have booked losses?

Post by illumination » Fri May 15, 2020 11:33 am

To me, the big advantage is writing off $3,000 in ordinary income every year. If you have $100k in losses, that's essentially 33+ years of taking that loss. Will you have ordinary income beyond those years? Maybe interest from bonds/CDs/savings accounts where you'd be taxed at a higher rate into retirement?


There has been talk about increasing the $3,000 figure since it was set in like 1978. So that might be something to consider if the next 30 years, they might increase the amount and possibly index it to inflation. $3,000 in 1978 is like $12,000 today. So maybe those losses could be used "quicker" down the road and not last as long?

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Re: What's the point of TLH when you already have booked losses?

Post by 17outs » Sat May 16, 2020 10:32 am

illumination wrote:
Fri May 15, 2020 11:33 am

There has been talk about increasing the $3,000 figure since it was set in like 1978. So that might be something to consider if the next 30 years, they might increase the amount and possibly index it to inflation. $3,000 in 1978 is like $12,000 today. So maybe those losses could be used "quicker" down the road and not last as long?
Is 3k the max you can realize per year? Do they roll over if its more?

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Re: What's the point of TLH when you already have booked losses?

Post by ruud » Sat May 16, 2020 11:03 am

17outs wrote:
Sat May 16, 2020 10:32 am
illumination wrote:
Fri May 15, 2020 11:33 am

There has been talk about increasing the $3,000 figure since it was set in like 1978. So that might be something to consider if the next 30 years, they might increase the amount and possibly index it to inflation. $3,000 in 1978 is like $12,000 today. So maybe those losses could be used "quicker" down the road and not last as long?
Is 3k the max you can realize per year? Do they roll over if its more?
3k is the maximum amount of ordinary income you can offset (and yes, it carries over to next year if you don't use all your losses). But you can offset an unlimited amount (AFAIK) of capital gains.
.

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Re: What's the point of TLH when you already have booked losses?

Post by retiredjg » Sat May 16, 2020 11:27 am

Any possibility you'll want to offset gains in the future from something other than investments? I think you could use banked losses for things like sale of a house or business?

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Re: What's the point of TLH when you already have booked losses?

Post by FIREchief » Sat May 16, 2020 12:31 pm

I think this is a "well, it can't hurt" situation. There is only potential benefit, with a worst case outcome of just consuming the banked losses selling the same assets and breaking even. Reading between the lines, I think this was what the OP was touching on, but I can't speak for him/her.
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Re: What's the point of TLH when you already have booked losses?

Post by aristotelian » Sat May 16, 2020 12:34 pm

You can carry over the losses to offset $3K of income annually plus infinity realized capital gains. Seems like a good thing to do with zero downside.

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Re: What's the point of TLH when you already have booked losses?

Post by retiredjg » Sat May 16, 2020 2:25 pm

I think there is a potential downside.

If you sell something at a loss and buy something similar, the replacement shares will have a lower relative cost basis than the original shares. When the replacement shares are sold, there will be more capital gains to pay tax on if you have run out of banked losses.

I suppose if you never run out of banked losses, this is not an issue. But banking losses that large might take a real downturn, not the little blip we saw recently.

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Re: What's the point of TLH when you already have booked losses?

Post by FIREchief » Sat May 16, 2020 2:47 pm

retiredjg wrote:
Sat May 16, 2020 2:25 pm
I think there is a potential downside.

If you sell something at a loss and buy something similar, the replacement shares will have a lower relative cost basis than the original shares. When the replacement shares are sold, there will be more capital gains to pay tax on if you have run out of banked losses.
I suppose this could be true if the shares with now-lower basis were ultimately sold when the owner was in a higher capital gains tax bracket. I hadn't considered that. Of course, the reverse could also be true (i.e. the shares with the now-lower basis are ultimately sold when the owner is in a lower - or zero - LTCG bracket).
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Re: What's the point of TLH when you already have booked losses?

Post by dratkinson » Sat May 16, 2020 2:58 pm

Jebediah wrote:
Fri May 15, 2020 9:34 am
Suppose I have 100K in carryover capital losses and a fund with 10K of unrealized losses. Is there any point to TLHing that fund to realize the loss? Why not just let it exist unrealized?
ruud wrote:
Sat May 16, 2020 11:03 am
...
3k is the maximum amount of ordinary income you can offset (and yes, it carries over to next year if you don't use all your losses). But you can offset an unlimited amount (AFAIK) of capital gains.
+1

Benefit of additional TLH. In year harvested, CLs offset CGs dollar-for-dollar, $3K/yr limit does not apply.

So if you normally receive dividends of $10K/yr in CGs, a $10K TLH will offset the CGs dollar-for-dollar. Then $3K of your $100K carryover loss can be used to offset $3K of ordinary income.
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Re: What's the point of TLH when you already have booked losses?

Post by Jebediah » Sat May 16, 2020 4:21 pm

dratkinson wrote:
Sat May 16, 2020 2:58 pm
Jebediah wrote:
Fri May 15, 2020 9:34 am
Suppose I have 100K in carryover capital losses and a fund with 10K of unrealized losses. Is there any point to TLHing that fund to realize the loss? Why not just let it exist unrealized?
ruud wrote:
Sat May 16, 2020 11:03 am
...
3k is the maximum amount of ordinary income you can offset (and yes, it carries over to next year if you don't use all your losses). But you can offset an unlimited amount (AFAIK) of capital gains.
+1

Benefit of additional TLH. In year harvested, CLs offset CGs dollar-for-dollar, $3K/yr limit does not apply.

So if you normally receive dividends of $10K/yr in CGs, a $10K TLH will offset the CGs dollar-for-dollar. Then $3K of your $100K carryover loss can be used to offset $3K of ordinary income.
I thought carryover losses from years past could be applied to any future capital gains, and then you get to apply 3K to ordinary income on top of that.

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Re: What's the point of TLH when you already have booked losses?

Post by kaneohe » Sat May 16, 2020 4:53 pm

zonto wrote:
Fri May 15, 2020 10:52 am
What's the point of not harvesting more losses? Only one I can think of is wanting to leave assets to your heirs with a higher basis.

............................................................
Don't inherited assets get a stepup in basis to date of death value ? so no gain if sold then.
Even if basis goes down , there is no gain if sold then.

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Re: What's the point of TLH when you already have booked losses?

Post by absolute zero » Sat May 16, 2020 5:12 pm

kaneohe wrote:
Sat May 16, 2020 4:53 pm
zonto wrote:
Fri May 15, 2020 10:52 am
What's the point of not harvesting more losses? Only one I can think of is wanting to leave assets to your heirs with a higher basis.

............................................................
Don't inherited assets get a stepup in basis to date of death value ? so no gain if sold then.
Even if basis goes down , there is no gain if sold then.
Correct. TLH will have no effect on the basis when inherited by heirs due to step-up in basis. So it’s a moot point.

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Re: What's the point of TLH when you already have booked losses?

Post by absolute zero » Sat May 16, 2020 5:20 pm

FIREchief wrote:
Sat May 16, 2020 2:47 pm
retiredjg wrote:
Sat May 16, 2020 2:25 pm
I think there is a potential downside.

If you sell something at a loss and buy something similar, the replacement shares will have a lower relative cost basis than the original shares. When the replacement shares are sold, there will be more capital gains to pay tax on if you have run out of banked losses.
I suppose this could be true if the shares with now-lower basis were ultimately sold when the owner was in a higher capital gains tax bracket. I hadn't considered that. Of course, the reverse could also be true (i.e. the shares with the now-lower basis are ultimately sold when the owner is in a lower - or zero - LTCG bracket).
I have no idea what you guys are talking about. With all due respect, is it possible you are both overthinking it?

OP sells shares for a $10K loss. Years later, the original shares recover to the value of their original cost basis. The replacement shares would have a similar gain. So at this point, the OP has a $10k unrealized gain along with $10k of additional carryover losses.

If he sells the replacement shares, the $10k loss offsets the $10k gain. It’s not a potential downside. It’s not a potential upside either. It’s just a scenario In which TLH makes zero difference.

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Re: What's the point of TLH when you already have booked losses?

Post by FIREchief » Sat May 16, 2020 5:28 pm

absolute zero wrote:
Sat May 16, 2020 5:20 pm
FIREchief wrote:
Sat May 16, 2020 2:47 pm
retiredjg wrote:
Sat May 16, 2020 2:25 pm
I think there is a potential downside.

If you sell something at a loss and buy something similar, the replacement shares will have a lower relative cost basis than the original shares. When the replacement shares are sold, there will be more capital gains to pay tax on if you have run out of banked losses.
I suppose this could be true if the shares with now-lower basis were ultimately sold when the owner was in a higher capital gains tax bracket. I hadn't considered that. Of course, the reverse could also be true (i.e. the shares with the now-lower basis are ultimately sold when the owner is in a lower - or zero - LTCG bracket).
I have no idea what you guys are talking about. With all due respect, is it possible you are both overthinking it?

OP sells shares for a $10K loss. Years later, the original shares recover to the value of their original cost basis. The replacement shares would have a similar gain. So at this point, the OP has a $10k unrealized gain along with $10k of additional carryover losses.

If he sells the replacement shares, the $10k loss offsets the $10k gain. It’s not a potential downside. It’s not a potential upside either. It’s just a scenario In which TLH makes zero difference.
No. I think you're over-simplifying. We were recognizing that the losses harvested would likely have already been offset by gains from other sold assets at the time the current replacement shares are sold. If I didn't have the losses, I might pay 15% LTCG on sale of the other assets. I saved that but might find myself in the 20% LTCG bracket when I ultimately sell the replacement shares. So, I come out behind. The reverse could also occur.
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Re: What's the point of TLH when you already have booked losses?

Post by absolute zero » Sat May 16, 2020 5:29 pm

Jebediah wrote:
Fri May 15, 2020 11:12 am
The point of leaving it unrealized is not having to transact if you don't have to.

If/when the asset class gains 10K in the future, it'll just offset the loss I took.

If I didn't have a stockpile of losses to use, then it makes sense to realize the loss. Otherwise, I still don't see a financial benefit. The idea of psych/cognitive benefits is interesting, thanks Livesoft
With the exception of utilizing those losses in 33+ years, the only scenario in which you could benefit is if you have other funds.

E.g. maybe you lower your cost basis in your international stock fund, but years from now you have massive gains in your US stock fund. In this case you won’t be just building up losses to offset them with an equal amount of gains in the same fund.

Do you have any other funds? If not, it still makes sense (to me) to keep building up losses. You might someday choose to invest in a new fund (with new money) in youR taxable account. And then perhaps you see large gains from that investment. Extra carryover losses would give you flexibility.

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Re: What's the point of TLH when you already have booked losses?

Post by kaneohe » Sat May 16, 2020 5:32 pm

Jebediah wrote:
Sat May 16, 2020 4:21 pm
dratkinson wrote:
Sat May 16, 2020 2:58 pm
......................................

+1

Benefit of additional TLH. In year harvested, CLs offset CGs dollar-for-dollar, $3K/yr limit does not apply.

So if you normally receive dividends of $10K/yr in CGs, a $10K TLH will offset the CGs dollar-for-dollar. Then $3K of your $100K carryover loss can be used to offset $3K of ordinary income.
I thought carryover losses from years past could be applied to any future capital gains, and then you get to apply 3K to ordinary income on top of that.
you are both correct. If you harvest the current unrealized loss of 10K while it is still around, you save an extra 10K
of loss for future use.
Last edited by kaneohe on Sat May 16, 2020 5:56 pm, edited 1 time in total.

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Re: What's the point of TLH when you already have booked losses?

Post by absolute zero » Sat May 16, 2020 5:49 pm

FIREchief wrote:
Sat May 16, 2020 5:28 pm
absolute zero wrote:
Sat May 16, 2020 5:20 pm
FIREchief wrote:
Sat May 16, 2020 2:47 pm
retiredjg wrote:
Sat May 16, 2020 2:25 pm
I think there is a potential downside.

If you sell something at a loss and buy something similar, the replacement shares will have a lower relative cost basis than the original shares. When the replacement shares are sold, there will be more capital gains to pay tax on if you have run out of banked losses.
I suppose this could be true if the shares with now-lower basis were ultimately sold when the owner was in a higher capital gains tax bracket. I hadn't considered that. Of course, the reverse could also be true (i.e. the shares with the now-lower basis are ultimately sold when the owner is in a lower - or zero - LTCG bracket).
I have no idea what you guys are talking about. With all due respect, is it possible you are both overthinking it?

OP sells shares for a $10K loss. Years later, the original shares recover to the value of their original cost basis. The replacement shares would have a similar gain. So at this point, the OP has a $10k unrealized gain along with $10k of additional carryover losses.

If he sells the replacement shares, the $10k loss offsets the $10k gain. It’s not a potential downside. It’s not a potential upside either. It’s just a scenario In which TLH makes zero difference.
No. I think you're over-simplifying. We were recognizing that the losses harvested would likely have already been offset by gains from other sold assets at the time the current replacement shares are sold. If I didn't have the losses, I might pay 15% LTCG on sale of the other assets. I saved that but might find myself in the 20% LTCG bracket when I ultimately sell the replacement shares. So, I come out behind. The reverse could also occur.

Ahh okay. I *think* I understand now. I believe the OP could harvest some gains if he were in such a situation (where he was wanting to pay 15% LTCG rates but had too many carryover losses).

BUT he may not recognize in that scenario that he is headed towards 20% LTCG rates in the future. So he may not harvest the gains, and consequently suffer a slight penalty from having harvested losses way back in May 2020.

This tax stuff can be tricky.

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Re: What's the point of TLH when you already have booked losses?

Post by kaneohe » Sat May 16, 2020 6:01 pm

Don't forget the time value of $$. If you harvest and only use 3K against ordinary income , in the 24% bracket
you are saving and hopefully reinvesting the $720 savings each which can add up over a period of time.

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Re: What's the point of TLH when you already have booked losses?

Post by FIREchief » Sat May 16, 2020 6:18 pm

absolute zero wrote:
Sat May 16, 2020 5:49 pm
This tax stuff can be tricky.
:P Yep. This TLH stuff is good exercise for the brain. To your earlier point, for most situations we were likely giving it more thought that it would ever be "financially" worth. That said, it's good to contemplate the nuances of the tax code to build up the ol' noodle for keeping up with whatever comes next. 8-)
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Re: What's the point of TLH when you already have booked losses?

Post by marcopolo » Sun May 17, 2020 1:50 am

FIREchief wrote:
Sat May 16, 2020 12:31 pm
I think this is a "well, it can't hurt" situation. There is only potential benefit, with a worst case outcome of just consuming the banked losses selling the same assets and breaking even. Reading between the lines, I think this was what the OP was touching on, but I can't speak for him/her.
I don't think it is always a "can't hurt" situation.

Consider someone in 0% capital gains tax bracket (living of taxable investments), the TLH would provide no current benefit, but would lower cost basis of the investment. That person could eventually end up in higher tax bracket due to tax law changes (higher rates or cap gains treated same as ordinary income) or higher income from RMD, Soc Sec, pension, etc. So, they would end up paying higher taxes on the eventual sale of the assets with lower basis.

I think this is not that unusual situation for early retirees living off taxable accounts while tax-deferred account continue to grow.
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Re: What's the point of TLH when you already have booked losses?

Post by Tracy » Sun May 17, 2020 2:41 am

zonto wrote:
Fri May 15, 2020 10:52 am
What's the point of not harvesting more losses? Only one I can think of is wanting to leave assets to your heirs with a higher basis.
...
The cost basis for stock you leave to your heirs is not your cost basis. The cost basis for heirs is "stepped-up"; it is the market value of the stock on the date of death. Here's a brief article explaining it: How to Calculate the Basis for Inherited Stock. So tax loss harvesting will not increase gains for your heirs.

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Re: What's the point of TLH when you already have booked losses?

Post by retiredjg » Sun May 17, 2020 8:17 am

FIREchief wrote:
Sat May 16, 2020 2:47 pm
retiredjg wrote:
Sat May 16, 2020 2:25 pm
I think there is a potential downside.

If you sell something at a loss and buy something similar, the replacement shares will have a lower relative cost basis than the original shares. When the replacement shares are sold, there will be more capital gains to pay tax on if you have run out of banked losses.
I suppose this could be true if the shares with now-lower basis were ultimately sold when the owner was in a higher capital gains tax bracket. I hadn't considered that. Of course, the reverse could also be true (i.e. the shares with the now-lower basis are ultimately sold when the owner is in a lower - or zero - LTCG bracket).
I don't disagree with the idea that one can move to a higher cap gains tax bracket. But that is not what I was talking about.

When you TLH, you reset your cost basis to something lower than what it was originally. Eventually, if the shares are sold, the capital gains will be larger than what they would have been if the TLH had never happened. There are more gains to pay tax on.

If one needs the money, rather than leaving it to hers, there are more gains to pay tax on.

Since there is a benefit to TLHing in the first place, it may all come out even or even if your favor. I'm just pointing out that doing a TLH is not always completely harmless which is where the conversation seemed to be going.

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Re: What's the point of TLH when you already have booked losses?

Post by JustinR » Sun May 17, 2020 8:51 am

retiredjg wrote:
Sun May 17, 2020 8:17 am
FIREchief wrote:
Sat May 16, 2020 2:47 pm
retiredjg wrote:
Sat May 16, 2020 2:25 pm
I think there is a potential downside.

If you sell something at a loss and buy something similar, the replacement shares will have a lower relative cost basis than the original shares. When the replacement shares are sold, there will be more capital gains to pay tax on if you have run out of banked losses.
I suppose this could be true if the shares with now-lower basis were ultimately sold when the owner was in a higher capital gains tax bracket. I hadn't considered that. Of course, the reverse could also be true (i.e. the shares with the now-lower basis are ultimately sold when the owner is in a lower - or zero - LTCG bracket).
I don't disagree with the idea that one can move to a higher cap gains tax bracket. But that is not what I was talking about.

When you TLH, you reset your cost basis to something lower than what it was originally. Eventually, if the shares are sold, the capital gains will be larger than what they would have been if the TLH had never happened. There are more gains to pay tax on.

If one needs the money, rather than leaving it to hers, there are more gains to pay tax on.

Since there is a benefit to TLHing in the first place, it may all come out even or even if your favor. I'm just pointing out that doing a TLH is not always completely harmless which is where the conversation seemed to be going.
I mean if you eventually sell at the same or lower tax bracket, then the extra cost basis gains are offset by the TLH savings, right?

I don't see how that's harmful.

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Re: What's the point of TLH when you already have booked losses?

Post by JustinR » Sun May 17, 2020 8:54 am

marcopolo wrote:
Sun May 17, 2020 1:50 am
FIREchief wrote:
Sat May 16, 2020 12:31 pm
I think this is a "well, it can't hurt" situation. There is only potential benefit, with a worst case outcome of just consuming the banked losses selling the same assets and breaking even. Reading between the lines, I think this was what the OP was touching on, but I can't speak for him/her.
I don't think it is always a "can't hurt" situation.

Consider someone in 0% capital gains tax bracket (living of taxable investments), the TLH would provide no current benefit, but would lower cost basis of the investment. That person could eventually end up in higher tax bracket due to tax law changes (higher rates or cap gains treated same as ordinary income) or higher income from RMD, Soc Sec, pension, etc. So, they would end up paying higher taxes on the eventual sale of the assets with lower basis.

I think this is not that unusual situation for early retirees living off taxable accounts while tax-deferred account continue to grow.
Can you save losses for later years or do you have to use at least $3k in the same year?

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Re: What's the point of TLH when you already have booked losses?

Post by jebmke » Sun May 17, 2020 9:01 am

JustinR wrote:
Sun May 17, 2020 8:54 am
Can you save losses for later years
No
When you discover that you are riding a dead horse, the best strategy is to dismount.

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Re: What's the point of TLH when you already have booked losses?

Post by retiredjg » Sun May 17, 2020 9:28 am

JustinR wrote:
Sun May 17, 2020 8:51 am
I mean if you eventually sell at the same or lower tax bracket, then the extra cost basis gains are offset by the TLH savings, right?

I don't see how that's harmful.
I think whether the increased gains are offset by the TLH savings might vary from one situation to another. My guess is that it usually is beneficial in the long run, but people were talking as if there was no backfire possible. I'm just saying there is a possible backfire.

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Re: What's the point of TLH when you already have booked losses?

Post by grabiner » Sun May 17, 2020 10:13 am

retiredjg wrote:
Sat May 16, 2020 2:25 pm
I think there is a potential downside.

If you sell something at a loss and buy something similar, the replacement shares will have a lower relative cost basis than the original shares. When the replacement shares are sold, there will be more capital gains to pay tax on if you have run out of banked losses.

I suppose if you never run out of banked losses, this is not an issue. But banking losses that large might take a real downturn, not the little blip we saw recently.
If you run out of banked losses, this will usually be a net gain.

Say you bought Fund A for $10K and sell it for $7K to buy Fund B. Years later, you sell Fund B for $14K, while Fund A is also worth $14K. If you run out of banked losses, then you had one more year to deduct $3K of those losses, so you saved the ordinary income-tax rate on $3K, and then when you sold, you paid capital-gains tax on $7K rather than $4K. Your net gain is the difference between the ordinary and capital-gains tax rate on $3K; this is likely to be a gain even if the two transactions are in different years.

If you don't run out of banked losses, this is break-even; the $7K gain on Fund B is offset by the $3K loss on Fund A, so you have the same $4K gain to pay tax on or to offset other capital losses.

The other benefit occurs if you never sell the replacement shares, either leaving them to your heirs or donating them to charity. Now you deduct the loss and never pay the tax on the gain.
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FIREchief
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Re: What's the point of TLH when you already have booked losses?

Post by FIREchief » Sun May 17, 2020 12:09 pm

marcopolo wrote:
Sun May 17, 2020 1:50 am
FIREchief wrote:
Sat May 16, 2020 12:31 pm
I think this is a "well, it can't hurt" situation. There is only potential benefit, with a worst case outcome of just consuming the banked losses selling the same assets and breaking even. Reading between the lines, I think this was what the OP was touching on, but I can't speak for him/her.
I don't think it is always a "can't hurt" situation.

Consider someone in 0% capital gains tax bracket (living of taxable investments), the TLH would provide no current benefit, but would lower cost basis of the investment. That person could eventually end up in higher tax bracket due to tax law changes (higher rates or cap gains treated same as ordinary income) or higher income from RMD, Soc Sec, pension, etc. So, they would end up paying higher taxes on the eventual sale of the assets with lower basis.

I think this is not that unusual situation for early retirees living off taxable accounts while tax-deferred account continue to grow.
Yes. I realized that as the discussion continued an posted the following several posts above yours.
I suppose this could be true if the shares with now-lower basis were ultimately sold when the owner was in a higher capital gains tax bracket. I hadn't considered that.
You must have missed that.
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Re: What's the point of TLH when you already have booked losses?

Post by FIREchief » Sun May 17, 2020 12:14 pm

retiredjg wrote:
Sun May 17, 2020 8:17 am
When you TLH, you reset your cost basis to something lower than what it was originally. Eventually, if the shares are sold, the capital gains will be larger than what they would have been if the TLH had never happened. There are more gains to pay tax on.
The assumption is that the tax losses harvested have already been used to offset capital gains of an equivalent amount. If a person is in the same capital gains tax bracket at both points, than the earlier savings would be identical to the later higher taxes. Other than time value of money, it would be a wash.
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

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