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Post by steadyeddy on Nov 1, 2022 0:33:38 GMT
I have already harvested quite a bit. And there is more I can.
What do you all do? Do you squeeze every ounce out of the tax losses? Or let them ride back up to become gains?
TIA,
Eddy
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Post by Chahta on Nov 1, 2022 1:59:42 GMT
I have already harvested quite a bit. And there is more I can. What do you all do? Do you squeeze every ounce out of the tax losses? Or let them ride back up to become gains? TIA, Eddy Why not take all you can? It only comes around once in a while. It carries over and can give you some satisfaction in this crummy market. You will be glad when things turn around and you can offset those Roth conversions, $3000 at a time.
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Post by Mustang on Nov 3, 2022 13:10:06 GMT
There are several good reasons for taking losses. If you have gains elsewhere and you are trapped in a stock or fund you do not believe will do good in the future then perhaps it time to move on and use the losses to offset gains. But if it is a solid stock or fund with a long term proven record of good performance then why sell it? Whether you sell or wait depends on a lot on your view of future performance.
I'm invested in funds I like so I'm not selling and locking in losses. I expect them to recover.
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Post by Chahta on Nov 3, 2022 15:19:22 GMT
Mustang , the reason to sell is a tax benefit. If there is no CG to offset then $3000 can go towards income, or in my case allow me to make larger Roth conversions. The idea is to use the proceeds to buy an equivalent fund/stock for a placeholder. Repurchasing your original holding after 30 days to avoid a "wash sale" is the way to do it. But tax loss harvesting is inly for taxable accounts, not IRAs. VTI/SCHX or SCHD/HDV are examples. Personally I have done it with muni funds I have for "free income" in my taxable account. That free income can be used for Roth conversion, avoiding tax on the funds used to convert. I have full faith in recovery.
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Post by ECE Prof on Nov 3, 2022 15:36:59 GMT
Mustang , the reason to sell is a tax benefit. If there is no CG to offset then $3000 can go towards income, or in my case allow me to make larger Roth conversions. The idea is to use the proceeds to buy an equivalent fund/stock for a placeholder. Repurchasing your original holding after 30 days to avoid a "wash sale" is the way to do it. But tax loss harvesting is inly for taxable accounts, not IRAs. VTI/SCHX or SCHD/HDV are examples. Personally I have done it with muni funds I have for "free income" in my taxable account. That free income can be used for Roth conversion, avoiding tax on the funds used to convert. I have full faith in recovery. Fido provide comparables ETFs and their expense ratios and other details in one screen from M*. For example, VOO, SPY, IVV, and a few are equivalent. I learned to use this to avoid wash sale on this October. I sold VOO, bought SPY, sold SPY, and bought IVV, and sold IVV also. It is more than a month. So, when I decide to buy, I VOO or IVV because I made money in IVV so that it will not be a wash sale. I like IVV better than VOO. I am moving away from Vanguard. I do not have any Vanguard stuff in our Vanguard brokerage accounts now, except for the settlement fund. So, I am moving to FIDO soon.
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Post by FD1000 on Nov 3, 2022 16:51:56 GMT
Harvest loss may cause more selling to year end.
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Post by steadyeddy on Nov 3, 2022 17:28:32 GMT
Thanks for the responses. I have already harvested sufficient losses to cover the gains. I still have more I can harvest. I can see what Mustang is saying, and I can also see what Chahta is saying. I guess these puppies are not recovering any time soon, so I can keep thinking about this..... thanks anyways
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Post by Chahta on Nov 3, 2022 17:45:47 GMT
Harvest loss may cause more selling to year end. Who may be selling more? You or me or the funds?
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Post by Deleted on Nov 3, 2022 17:48:17 GMT
Thanks for the responses. I have already harvested sufficient losses to cover the gains. I still have more I can harvest. I can see what Mustang is saying, and I can also see what Chahta is saying. I guess these puppies are not recovering any time soon, so I can keep thinking about this..... thanks anyways Whether to book a tax loss, when, and how (e.g., with or without buying a replacement) depend on a number of factors, as you know. If looking for advice, it helps others to know the symbol(s) and your history of owning it (them).
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Post by richardsok on Nov 3, 2022 17:50:41 GMT
Harvest loss may cause more selling to year end. Who may be selling more? You or me or the funds? It might be an interesting race -- I'm guessing people will be crowding into the Pimco CEFs for the special distributions while at the same time others will be dumping Pimco for the tax losses.
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Post by FD1000 on Nov 3, 2022 17:55:00 GMT
Harvest loss may cause more selling to year end. Who is selling? Thousands who lost and will sell to year end if they are smart.
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Post by habsui on Nov 3, 2022 20:35:30 GMT
Harvest loss may cause more selling to year end. Who may be selling more? You or me or the funds? The funds are done for this year.
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Post by retiredat48 on Nov 4, 2022 0:22:28 GMT
I thought the purpose of investing was to not have losses.
I haven't had a tax loss in decades.
Oh, you're right, I have almost all my investment assets in Trad and ROTH IRAs! (Not counting three homes).
R48
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Post by Chahta on Nov 4, 2022 13:39:14 GMT
retiredat48 , of course there is no loss until a holding is sold. Tax loss harvesting is a bit like trading. Of course if all RMDs are comsumed for income then there is no reason. It really is a "no-brainer".
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Post by retiredat48 on Nov 4, 2022 14:24:45 GMT
retiredat48 , of course there is no loss until a holding is sold. Tax loss harvesting is a bit like trading. Of course if all RMDs are comsumed for income then there is no reason. It really is a "no-brainer". The point was: One cannot tax loss harvest IRA trades. R48
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Post by Chahta on Nov 4, 2022 15:03:16 GMT
Of course, thus my reference to RMDs being consumed and not reinvested.
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Post by FD1000 on Nov 4, 2022 21:01:39 GMT
Who may be selling more? You or me or the funds? The funds are done for this year. I'm talking about thousands of individuals who lost money YTD.
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Post by steadyeddy on Nov 5, 2022 1:08:37 GMT
The funds are done for this year. I'm talking about thousands of individuals who lost money YTD. FD1000 is correct. Many would hold on to losing positions till almost the year-end before selling to realize loss (in taxable accounts, of course).
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Post by habsui on Nov 5, 2022 4:19:19 GMT
I'm talking about thousands of individuals who lost money YTD. FD1000 is correct. Many would hold on to losing positions till almost the year-end before selling to realize loss (in taxable accounts, of course). Yes, he is correct. I was answering the question about who is selling, funds or individuals. I believe that most mutual funds are done with their year end selling.
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Post by yogibearbull on Nov 5, 2022 12:09:03 GMT
Mutual fund TLH is in October as they are allowed to close books for the year on October 31 to provide data for yearend CGs in November/December.
Retail TLH is in December. To help procrastinators, the markets are open normally on the last business day of the year.
From Barron's, Part 1,
OPTIONS. NOVEMBER 29 (Tuesday) is the last day this year to DOUBLE-UP for tax-loss harvesting (TLH) this year. The doubling up can be by buying fallen stock or cheaper options by 11/29/22 and then selling the older lot(s) by DECEMBER 30 (Friday), the last trading day of this year. AXP is used as an example. (Alternate is to immediately swap into something similar but not identical) (Tax-losses for individuals don’t expire and can be carried forward for years to offset future gains and up to $3K/yr in ordinary income)
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Post by steadyeddy on Nov 5, 2022 13:38:06 GMT
This year has been brutal on both stocks and bonds and therefore my 'lemons' are in stock ETFs, bond ETFs and bond CEFs.
I am going to hold on to the stock ETFs.
I am trying to assess if bond ETFs or bond CEFs are better for harvesting? In other words, when things get better, which of these two wrappers would recover quicker?
Thanks.
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Post by Chahta on Nov 5, 2022 15:31:47 GMT
This year has been brutal on both stocks and bonds and therefore my 'lemons' are in stock ETFs, bond ETFs and bond CEFs. I am going to hold on to the stock ETFs. I am trying to assess if bond ETFs or bond CEFs are better for harvesting? In other words, when things get better, which of these two wrappers would recover quicker? Thanks. You are only trading one for a similar one for 1 month and 1 day. The chances of any significant recovery in 1 month is nil. And if there is, that is the reason for trading for a very similar fund. Simply change back to your favorite. Everything will recover IMHO. ETFs and CEFs are good because there are no short-term redemption fees. Tax loss will go a long way to cover CEF income in a taxable account. OUCH! Selling appreciated positions too is a great way to reset your cost higher.
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Post by steadyeddy on Nov 5, 2022 19:03:15 GMT
This year has been brutal on both stocks and bonds and therefore my 'lemons' are in stock ETFs, bond ETFs and bond CEFs. I am going to hold on to the stock ETFs. I am trying to assess if bond ETFs or bond CEFs are better for harvesting? In other words, when things get better, which of these two wrappers would recover quicker? Thanks. ....... Tax loss will go a long way to cover CEF income in a taxable account..... Chahta, can you please expand/explain this highlighted sentence?
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Post by Deleted on Nov 5, 2022 21:25:29 GMT
YBB - I am going yo TLH and appreciate the pointers. I guess the tax could get changed to limit the carry forward period though - possible?
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Post by yogibearbull on Nov 6, 2022 0:00:45 GMT
YBB - I am going yo TLH and appreciate the pointers. I guess the tax could get changed to limit the carry forward period though - possible? Rules for TLH for individuals haven't been changed in years. Even the $3K annual offset of net loss against ordinary income hasn't been changed, or inflation-adjusted. They have been stingy for years. I would expect changes to be in the direction of relaxation. Rules for TLH for businesses are more generous and the change has been in the direction of relaxation. Business TLH carryforward used to be limited in years but now it is also for unlimited time. Amounts for losses are limited by % of income, not by $amounts. That is why many companies take huge write offs in the M&A or restructuring years and then pay very little tax for years forward.
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Post by steadyeddy on Nov 6, 2022 2:02:29 GMT
YBB - I am going yo TLH and appreciate the pointers. I guess the tax could get changed to limit the carry forward period though - possible? Rules for TLH for individuals haven't been changed in years. Even the $3K annual offset of net loss against ordinary income hasn't been changed, or inflation-adjusted. They have been stingy for years. I would expect changes to be in the direction of relaxation. Rules for TLH for businesses are more generous and the change has been in the direction of relaxation. Business TLH carryforward used to be limited in years but now it is also for unlimited time. Amounts for losses are limited by % of income, not by $amounts. That is why many companies take huge write offs in the M&A or restructuring years and then pay very little tax for years forward. yogibearbull, so tax loss harvested in a joint taxable account, does the annual offset apply for the lives of both account holders? I can apply $3K a year for many many years -
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Post by yogibearbull on Nov 6, 2022 2:29:18 GMT
steadyeddy, TLH is at IRS tax filing level, not at investment accounts level. For joint tax filing, all G/L in all accounts (individual - his/her and joint) of the couple would be netted, combined with any loss carryforward, and of net loss, up to $3K/yr would be used against ordinary income. Remaining loss carries forward to future years. If married filing separately (or single), the annual ordinary income amount is halved to $1,500 (= $3,000/2). There is a weird rule if a spouse passes away. If the deceased spouse held an account individually (not jointly), losses from that account will vanish after the final estate tax filing, i.e. surviving spouse won't be able to carryover any portion of those losses. Surviving spouse can carryforward half of the losses from joint accounts.
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Post by Chahta on Nov 6, 2022 3:52:17 GMT
....... Tax loss will go a long way to cover CEF income in a taxable account..... Chahta, can you please expand/explain this highlighted sentence? Sorry I was out today. YBB said it. Losses must first offset gains but $3000 per year can offset income. Left over carries forward for as many years as it takes to use it. No one likes to book a loss but you are temporarily using similar funds while waiting for recovery. If you want your old fund back just make sure you wait 31 days to buy back, otherwise you lose the tax loss. It’s one of the few ways us peon investors can effectively use tax law. One caveat; you can’t buy the similar fund less than 30 days before either. Please read up on “wash sale”. It’s not difficult. www.investopedia.com/terms/w/washsale.asp
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Post by Deleted on Nov 6, 2022 13:01:15 GMT
My TLH was in January with VWALX. I favor doing it early. Can always rebuy after 30 days. The popular Nuveen substitute isn't offered at Vanguard. Anyway, money market has done well this year.
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Post by Deleted on Nov 6, 2022 13:50:25 GMT
Chahta , can you please expand/explain this highlighted sentence? Sorry I was out today. YBB said it. Losses must first offset gains but $3000 per year can offset income. Left over carries forward for as many years as it takes to use it. No one likes to book a loss but you are temporarily using similar funds while waiting for recovery. If you want your old fund back just make sure you wait 31 days to buy back, otherwise you lose the tax loss. It’s one of the few ways us peon investors can effectively use tax law. One caveat; you can’t buy the similar fund less than 30 days before either. Please read up on “wash sale”. It’s not difficult. www.investopedia.com/terms/w/washsale.aspAdd on - One thing to watch with wash sales is automatic dividend/distribution reinvestments as well.
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