Wednesday, August 23, 2017

Tax Loss Selling

Although it's still a ways from the end of 2017, I am already considering how we will create tax losses against our gains, while maintaining positions that I want to keep.

As background, the IRS has a 30 day wash sale rule that prevents investors from selling losses and immediately repurchasing the same stock.    An investor needs to wait over 30 days when buying back the same stock.  

One way to circumvent this rule is to buy a different stock, but similar in business.  An example would be to sell GE at a loss, and buy United Technologies as a replacement.    This would avoid the 30 day wash rule.

My approach is acquire or sell the subject stock, and then sell or buy the same stock 31 days (or more) later.  Of course the risk is that the stock will rise during that time.  So I tend to acquire first and then sell late.

Stocks I am considering for tax loss selling:  Tidewater, Seadrill, Contango Oil and Gas, and Under Armour.

Disclosure: At time of posting, we own shares of GE, United Technologies, Tidewater, Seadrill, Contango Oil and Gas, and Under Armour.

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This is not financial, investing, or tax advice. Please consult a professional advisor.

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