Using up tax losses - which lots will use the loss and do I have any control over it?

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SunRainSnow
Posts: 168
Joined: Thu Dec 31, 2020 2:03 pm

Using up tax losses - which lots will use the loss and do I have any control over it?

Post by SunRainSnow »

I plan on selling some ETF to pay for a house. I have four lots (LIFO) that I want to sell, one has been held less than a year (short term) and the other three have been held over a year (long term). I don't have enough losses to offset all of the gains so I'll have ~$6,000 that will be 'taxable' after the sale.

Given the preferential treatment long term holdings have I wanted to make sure the offsetting losses are allocated to the short term gain lot.

Do I have any control over that? Is it allocated chronologically?
erp
Posts: 565
Joined: Wed Feb 01, 2023 4:19 pm

Re: Using up tax losses - which lots will use the loss and do I have any control over it?

Post by erp »

Losses match up to gains by type first, ie short to short and long to long. Then they cover each other.
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retired@50
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Location: Living in the U.S.A.

Re: Using up tax losses - which lots will use the loss and do I have any control over it?

Post by retired@50 »

SunRainSnow wrote: Sat Apr 01, 2023 4:53 pm Do I have any control over that? Is it allocated chronologically?
See if you're allowed to specify a cost basis method at your broker.

I would imagine that if you're using ETFs you'd be allowed to choose Spec Id, which is generally favored because it gives you the most control over what gets sold.

More details in the cost basis methods wiki page.

Regards,
If liberty means anything at all it means the right to tell people what they do not want to hear. -George Orwell
Katietsu
Posts: 7676
Joined: Sun Sep 22, 2013 1:48 am

Re: Using up tax losses - which lots will use the loss and do I have any control over it?

Post by Katietsu »

I find it easiest to understand if I print out a Sch D and work through it by hand.
bmcgin
Posts: 176
Joined: Tue Jan 10, 2023 7:15 pm

Re: Using up tax losses - which lots will use the loss and do I have any control over it?

Post by bmcgin »

Brokers allow you to select the lots up to 24 hours after the sale (before settlement). It can usually be done on their website. Some brokers such as Etrade and Fidelity allow you to select the exact lot prior to the sale.
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