To clarify that for those less informed about the taz rules, you can carry forward any unused tax losses forever.
Thus, the only reason to sell a winning stock is if you're convinced you can buy it back later at a lower price.
Mike, to re-clarify, I do not think that is what the advisor Fred referred to meant at all. She said sell the winners and buy them back immediately.
Sure you can carry the losses forever. Lets say you lost $90,000 in this debacle. If you have no offsetting gains that means that at $3000 per year you can carry the losses for 30 years. Due to the time value of money that would not be very good. Of course, if you have gains over those years you can offset them against the losses. But each year you wait you've effectively lost a bit.
Lets take an example. Say I lost that $90,000 above. I also have a day job where I made $120,000. After deductions, my taxable income from the day job is $90,000. So, I've made $90,000 and I've lost $90,000. From an economic standpoint you might say that the year was a wash, but from a tax standpoint I would owe taxes on $87,000 of income: The $90,000 from the job less the $3000 loss allowance. Those taxes might come to $20,000 or so. Now lets also say that I need more money to live on, (or to help pay the tax) and I plan to sell some securities to raise $40,000. If I sell securities where I have more losses, nothing changes, but if I sell securities where I have a $30,000 gain, suddenly I get to offset some loses. So my taxible income drops from $87,000 to $57,000 and the taxes I owe drop accordingly.
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