This is the time of year when having clinkers in your stock portfolio isn't quite so painful. If you have capital gain for the year, you still have a few trading days to offset them by selling your loser stocks. Just remember a few simple rules:
-The loss has to be realized in a taxable account. Selling a loser in an IRA or 401(k) plan doesn't give you a deductible loss.
-Be sure the trades are executed no later than December 31. For long positions, the trade date controls.
-If you have a loss on a short sale, the settlement date has to be no later than December 31.
-You can't buy the same stock within either 30 days before the sale or 30 days afterwards. If you do, the "wash sale" rules disallow your loss.
Remember: capital losses are fully deductible to the extent of your capital gains. They can also offset up to $3,000 in ordinary income. Losses over that amount carry over to future years. So bid your losers a fitting farewell by selling them this year to help you out at tax time.
This is another in our series of daily tax ideas through December 31. Collect them all!
The items included in the Tax Update Blog are informational only and are not meant as tax advice. Consult with your tax advisor to determine how any item applies to your situation.
Joe Kristan writes the Tax Update items, and any opinions expressed or implied are not necessarily shared by anyone else at Roth & Company, P.C. Address questions or comments on Tax Updates to