Stock Losses

[savory]

Hi,

This year I had what I consider substantial stock losses, nearly all short term as I reorganized my portfolio. I see no reason not to use them all this year by selling some gains, which will all be long term and reinvesting to rebalance my portfolio.

I just want to be sure that there is not a 'rainy day' strategy or such that would suggest to hold onto some of the losses for later years. I definitely have enough gains to use all of the loses.

Thanks

 

[RunningBum]

There can be some reasons not to use up all of your cap losses. I manage income to get an ACA subsidy, and some years a $3000 carry over loss might be enough to keep me away from the cliff. In other years it lets me do a slightly larger Roth conversion. It's also possible that I will never need to use my appreciated stock funds in my life time, so keeping them for my heirs to get a stepped up basis.

If you're in a very high tax bracket, it might also be worthwhile to save losses to use against any future cap gains that might be taxed above 15%, or use a $3000 carry over each year against regular income in a higher bracket.

But if you aren't concerned about ACA subsidies, carrying over losses is like giving the govt a 0% interest loan, or making a far in advance tax payment. And if you still have some reorganizing of your portfolio to do to get you where you want to be, it's a very good reason to take gains that will be cancelled by your losses.