Stock Loss Harvesting Question

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Stillwater1971
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Stock Loss Harvesting Question

Post by Stillwater1971 »

I currently own one stock in a taxable brokerage. I purchased it in Dec 2019 and watched it tank in January 2020. It has never recovered. I sold a 50% portion of what I had left in February of this year and the remainder just this week.

As far as Tax Loss Harvesting goes, does it only apply when you have Capital Gains ( which I do not because the rest of my Investments are Tax Sheltered)? Or can it apply to regular income at the end of the year taxes?
jebmke
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Re: Stock Loss Harvesting Question

Post by jebmke »

If you look at line 16 on Schedule D it explains everything.
Stay hydrated; don't sweat the small stuff
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BolderBoy
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Re: Stock Loss Harvesting Question

Post by BolderBoy »

Stillwater1971 wrote: Wed Oct 27, 2021 9:09 amOr can it apply to regular income at the end of the year taxes?
Yes. Up to $3000/yr. It is an "above the line" deduction so can be very valuable.

Oh, and stop investing in individual stocks. A broad market index fund is wiser.
"Never underestimate one's capacity to overestimate one's abilities" - The Dunning-Kruger Effect
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Stillwater1971
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Re: Stock Loss Harvesting Question

Post by Stillwater1971 »

jebmke wrote: Wed Oct 27, 2021 9:12 am If you look at line 16 on Schedule D it explains everything.
I appreciate your willingness to help, but I feel like a noob because it explains little to nothing to me. Maybe in Layman's terms would be best.
Topic Author
Stillwater1971
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Re: Stock Loss Harvesting Question

Post by Stillwater1971 »

BolderBoy wrote: Wed Oct 27, 2021 9:44 am
Stillwater1971 wrote: Wed Oct 27, 2021 9:09 amOr can it apply to regular income at the end of the year taxes?
Yes. Up to $3000/yr. It is an "above the line" deduction so can be very valuable.

Oh, and stop investing in individual stocks. A broad market index fund is wiser.
It was a lesson learned. The majority of my investments is in VTSAX. :happy
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arcticpineapplecorp.
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Re: Stock Loss Harvesting Question

Post by arcticpineapplecorp. »

an asset you sell for less than you paid originally results in a loss. how you harvest that loss, or rather, how you choose to use it differs depending upon your situation (you may or may not have income to be reduced. you may or may not have other gains that are taxable. you may or may not have excess losses after utilizing your losses in a given year, etc. more information would be needed).

you may be able to offset gains taken on sale of other assets that sold for more than you paid originally.
you may be able to lower your taxable income by $3000 in the year you take the loss.
you may be able to carry over excess lossses above $3000 and/or losses remaining after canceling out gains.

read more here and let us know what questions you still have:
https://www.bogleheads.org/wiki/Tax_loss_harvesting
It's hard to accept the truth when the lies were exactly what you wanted to hear. Investing is simple, but not easy. Buy, hold & rebalance low cost index funds & manage taxable events. Asking Portfolio Questions | Wiki
redmaw
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Re: Stock Loss Harvesting Question

Post by redmaw »

Your loss will first cancel out any gains, first with the same holding period (long term loss cancels long gains first), then with a different holding period, then if anything is left over up to 3000 is deducted from ordinary income. If anything is left after that it is carried over to the next year, and the same cancelation process starts over.
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Stillwater1971
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Re: Stock Loss Harvesting Question

Post by Stillwater1971 »

I think I understand now. I lost more than 3k in the stock this year when I ultimately sold it.
jebmke
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Re: Stock Loss Harvesting Question

Post by jebmke »

Stillwater1971 wrote: Wed Oct 27, 2021 9:46 am
jebmke wrote: Wed Oct 27, 2021 9:12 am If you look at line 16 on Schedule D it explains everything.
I appreciate your willingness to help, but I feel like a noob because it explains little to nothing to me. Maybe in Layman's terms would be best.
ah, I gave you the wrong line number. Line 21 -- it is pretty straightforward. The smaller of the total loss and $3,000 transfers to the 1040.

Sorry for the misdirection.
Stay hydrated; don't sweat the small stuff
Topic Author
Stillwater1971
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Re: Stock Loss Harvesting Question

Post by Stillwater1971 »

jebmke wrote: Wed Oct 27, 2021 10:28 am
Stillwater1971 wrote: Wed Oct 27, 2021 9:46 am
jebmke wrote: Wed Oct 27, 2021 9:12 am If you look at line 16 on Schedule D it explains everything.
I appreciate your willingness to help, but I feel like a noob because it explains little to nothing to me. Maybe in Layman's terms would be best.
ah, I gave you the wrong line number. Line 21 -- it is pretty straightforward. The smaller of the total loss and $3,000 transfers to the 1040.

Sorry for the misdirection.
That's ok jebmke. I appreciate your help. Line 21 does make more sense! Thanks! :beer
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