Tag Archives: Tax Loss Harvest

Harvesting Tax Losses/Gains (Clients)

Can you tell it is tax time? 

Lot’s of tax posts from now until the end of the year … just as a heads up!

As the year nears end, tax harvesting begins.

Tax Losses/Gainstax-468440__340

Good tax planning most of the time means neither showing big losses or certainly big gains. While never an exact science, appropriate planning helps surprises in April!

Losses, under current tax laws are restricted to $3k deductions on investments such as stocks and bonds (Active investments.) Larger losses are suspended and then pulled forward in future years.

Sales and an immediate repurchase are a neat way to realize/step up in basis gains and offset losses.

Sales of a loss and careful re-investment will realize a loss (Wash sales rules prevent the immediate repurchase of the same security for loss realization – Gains are not held captive to this rule for obvious reasons.)

Capital Gains are distributed by many packaged products such as indexes and funds near the end of the year in most cases. Many of these gains are available in advance due to a November year end for many packaged investments, helping with planning now.

Bottom line … you may see a few transactions as Donald “The Brain” does his tax magic!

Have a Great “Tax Harvesting” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.

Another End of the Year Tax Tip – Tax Loss Harvesting; Watch out for the Wash Sale Rule

As the end of the year approaches, we find that Tax Loss Harvesting may be beneficial for tax obligation purposes.

Here are a few Tax Harvesting items we are completing at this time:

  • Just as a reminder, never let the tax tail wag the dog as this can result in a less than adequately allocated investment portfolio, possibly leaving investments far worse off than the tax benefits achieved.
  • Review realized Gains and Losses for possible tax exposure and compare this to your tax loss carryover from the prior years, if any.
  • Access unrealized Gains and Losses and look for possible offsetting transactions.
  • Consider replacing a losing investment to offset gains, but again review your pre and post transaction allocations for appropriate diversification.
  • Watch out for the Wash Sale, which is the sale and repurchase of the same or similar security within a 30 day period of time, as the IRS does not like this type of transaction, and may disallow it depending on your situation. (See IRS Publication 550 for greater detail.)

No tax talk would be complete without the disclaimer, so here we go:  Each situation is different, please consult your tax advisor for your specific situation. This is not a recommendation to buy or sell a specific security.

We hope this helps keep Uncle Sam from digging deeper into your pocket in the spring of 2012!

Have a Great Day!


PS Cathy is out sick today, your patience is greatly appreciated.