Taxable Gains (Losses) and Your Investment Returns; Not Always Connected

This time of the year investors tally their gains and losses and apply them to their US Tax returns. An item worth remembering is that realized gains and losses are not the same as an investor’s return on their investment portfolio.

Tax Frustration

The Internal Revenue Service is most concerned with the original basis of an investment versus the price sold. Most investors over the latest several years have had losses in at least one area of their portfolio, but keep in mind, realized losses do not necessarily accurately reflect returns. 

Many investors may have sold long term holdings over the last several years, realizing gains, even as prices may have come down dramatically from their highs, unfortunately leading to additional taxes due.

A good point to remember, and in defense of most accountants this time of the year, is that realized taxable gains and losses, do not always represent investment returns, and are challenging to predict.

Have A Good Day!


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