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)