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Selling at a loss to save some bucks

I’ve remarked that by February/March when many of us are running to our tax man (queue up the Beetles’ song by that title) it’s already too late for certain things it may be wise to do before year end.
Selling stock at a loss may be something to consider. First, if you have any stock gains during the year, losses will offset or completely cancel those gain. If the losses are greater than your gains, up to $3000 may be taken again ordinary income producing a tax savings.
One reason I bring this up today and not mid-December is that you may feel that the stock you hold have good fundamentals and you expect them to rebound, i.e. you wish to hold them for the long term. You are not permitted to sell stock at a loss and buy back the same stock in fewer than 30 days. This is called a wash sale, and the loss is not allowed, it simply reduces the cost basis of the repurchased shares. You are, however, permitted to buy shares, wait 31 days and sell the losing shares (identifying those shares to your broker as the shares you wish to sell) and not run afoul of the wash sale rules.
As always, I warn that you should not let the tax tail wag the investing dog. And you should always know why your portfolio is invested the way it is, whether it be in individual stocks, ETFs, or mutual funds.

Joe

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