Talk:Tax loss harvesting

In this example, you get both interest-free loan and free money from the IRS. You deducted the $1,000 loss at the 25% rate. When you sold the shares, you had $1,000 more capital gains on the $9,000 investment compared to the case without tax loss harvesting. However, you paid 15% on the capital gains. So, 15% of $1,000, which is $150, is an interest-free loan, and 10% (= 25% - 15%) of $1,000, which is $100, is free money from the IRS.

In the above example I find the $150 - interest free loan and $100 free money from IRS confusing to understand. Is it possible to make it more clear? --LazyNihilist 23:46, 23 September 2011 (EDT)


 * Perhaps the page could use a section devoted to a potential caveat regarding tax loss harvesting (as well as the associated asset location issue) during the later stages of the life cycle. As loss carryforwards end with the death of the taxpayer (IRS pub 544).
 * from Fischer, Marcel, Are Bonds Desirable in Tax-Deferred Accounts? (February 7, 2008). Available at SSRN: http://ssrn.com/abstract=997818 or http://dx.doi.org/10.2139/ssrn.99781"'Another interesting aspect that arises from the different taxable treatment of capital gains and losses is the fact that a tax loss carry-forward that has not been used until the end of the investor's life is forfeited. This causes the value of the tax loss carry-forward to decrease substantially as the investor gets older.'"--Blbarnitz 13:05, 27 November 2013 (CST)

The SSRN paper was authored at the Copenhagen Business School (Sweden). Are there additional (peer reviewed) papers which discuss this aspect? I didn't understand the paper, but would this proposed section conflict with tax location guidance elsewhere in the wiki (Principles of tax-efficient fund placement - asset allocation without regard to taxes first, then consider taxes)?

Perhaps this could be simplified as a "finer point" of operation? Readers would then be aware of the IRS restriction.


 * Death of taxpayer. Capital losses cannot be carried over after a taxpayer's death. They are deductible only on the final income tax return filed on the decedent's behalf. (IRS pub 544).

Note that I hacked the URL to point exactly at the start of the section. Increment (or decrement) the number at the tail end of the URL by a few counts and watch the starting position change within the page. In this case, the number changed from 100072648 to 100072659. Also, the DOI URL is missing the last digit: http://dx.doi.org/10.2139/ssrn.997818

--LadyGeek 16:28, 27 November 2013 (CST)

Wash sale redraft?

 * Livesoft suggestion:Re: Any book recs specifically for Tax Harvesting?, forum discussion


 * for passage:

"'If you sell Total Stock Market with losses and buy back the same fund within 30 days before or after the sale, that would be called a wash sale, and you cannot claim the losses on your 2008 tax return. The definition of a wash sale is a bit more complicated than that. Before you do tax loss harvesting, be sure to familiarize yourself with the wash sale rule.'"


 * Could be instead:

"If you sell shares of Total Stock Market for a loss and buy new, different, or replacement shares of the same or substantially identical fund within 30 days before or after the sale in any accounts owned by you or your spouse including IRAs, that would create a so-called wash sale. The loss would then be disallowed temporarily (or permanently if the different shares are held in an IRA) and you cannot claim the loss on your tax return. The definition of a wash sale is a bit more complicated than that. Before you do tax loss harvesting, be sure to familiarize yourself with the wash sale rule.

It is not a wash sale if you buy shares and within 30 days sell those shares for a loss since they are the same shares and are not new, different, nor replacement shares. You must still own other shares purchased in the 30 days before or after the sale for a wash sale to occur. Also it is not illegal to create a wash sale. There is no extra penalty for a wash sale beyond having the loss disallowed on your tax return usually temporarily." --Blbarnitz 16:04, 23 December 2014 (CST)

Reader feedback: Strategies for taking the mo...
23.126.179.98 posted this comment on 1 March 2015 (view all feedback).

"Strategies for taking the most advantage of this, how to accumulate lots of lots of losses, and the long term benefits of having lots of losses available to offset other income (including from Roth conversions, if that's how it works, I'm not sure and would like to learn more."

Any thoughts?

Blbarnitz 20:41, 2 March 2015 (CST)