OT: Tax Guru's

[Smiley]

Can I selling a losing stock to offset gains from a winning stock to wipe out any profitable gains from my year end returns. Thanks

been awhile since I did this and did not remember if the losses were limited to $3500 per year

[Volant]

Yes, a loss can be used to offset a gain (net effect if equal; zero tax). Your net loss for a year is capped at $3,000 with any loss above that being carried forward.
Ex. If you had a net loss last year of $13,000, only $3,000 of that could be claimed on last year's return with $10,000 carrying forward. If this year, your gain was $10,000, the loss carry forward offsets that so tax this year would be $0.
Another way to look at it, if this year you have a $5,000 gain, and you can sell a stock today (Dec. 31) at a loss (that you're comfortable with), then that loss will offset that gain.

BTW, I'm sitting here today debating about the same thing (do I take the loss and reduce my tax bill, or keep the holding as it'll pop as soon as I sell it!).

[SamIAm]

Originally Posted by Volant

Yes, a loss can be used to offset a gain (net effect if equal; zero tax). Your net loss for a year is capped at $3,000 with any loss above that being carried forward.
Ex. If you had a net loss last year of $13,000, only $3,000 of that could be claimed on last year's return with $10,000 carrying forward. If this year, your gain was $10,000, the loss carry forward offsets that so tax this year would be $0.
Another way to look at it, if this year you have a $5,000 gain, and you can sell a stock today (Dec. 31) at a loss (that you're comfortable with), then that loss will offset that gain.

BTW, I'm sitting here today debating about the same thing (do I take the loss and reduce my tax bill, or keep the holding as it'll pop as soon as I sell it!).

Well that about sums it up. There are some rules around whether the gain is short term and long term as well. I think you can offset short term losses with long term gains, but must offset short term gains with short term losses, but am not 100% sure.

If you plan to buy the losing stock back again within 30 days, look out for the wash sale rule. Here is a link:

http://www.smartmoney.com/personal-f...le-rules-9860/

[Volant]

Good point on the wash sale rule!!