IntermediateMAD Academy0:45Taxes

Realizing a Loss On Purpose

Harvesting converts a paper loss into a deduction against gains, and the value is real but smaller than it is often presented.

0:45 · 6 scenes

This lesson is part of a MAD Academy plan.

What the Lesson Covers

  1. 0:00A loss you have not realized does nothing for you at tax time.
  2. 0:05The order of offset. Losses offset gains of the same type first, then the other type, then income.
  3. 0:14What it is really doing. Mostly deferring tax, not eliminating it, because the new basis is lower.
  4. 0:23Doing it without breaking the rule. Buy something similar but not substantially identical, or simply wait it out.
  5. 0:32The honest limit. The excess against ordinary income is capped, with the remainder carried forward.
  6. 0:40Treat it as deferral, and mind the wash sale window.
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Educational content only. MadStockAlerts provides market commentary, research, and educational content. It is not personalized investment advice, and nothing here is a recommendation to buy or sell any security. Trading and investing involve substantial risk, including loss of capital. See the Risk Disclosure and Customer Agreement.
Educational content only. MadStockAlerts provides market commentary, research, and educational content. It is not personalized investment advice, and nothing here is a recommendation to buy or sell any security. Trading and investing involve substantial risk, including loss of capital. See the Risk Disclosure and Customer Agreement.
Realizing a Loss On Purpose — MAD Academy Training Video · MadStockAlerts