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Loss Harvesting: beware wash sales

August 09, 2011

The stock market debacle of the last few days has left many of us with some potential capital losses. If you were astute enough to cash out some capital gains earlier this year, the time might be right to cash out some capital losses to offset them -- capital losses are allowed for individuals to the extent of capital gains, plus $3,000.

If you do take capital losses, remember that the "wash sale" rules will thwart your capital loss deduction if you replace the sold loss stock in the 30 days before or after the loss sale.

TaxGrrrl has a timely explanation of the capital loss rules at her Forbes blog.

Tags: capital losses.TaxGrrrl.wash sale.