Abstract
The evidence is quite strong that systematic loss harvesting is one of the most important elements of the tax-efficient portfolio management process. In this article, the authors address the rules, pitfalls, and methods investors may utilize in realizing losses in their portfolios. They first observe that the simplest way to harvest losses when a portfolio has both unrealized winners and losers is to harvest them together. But portfolios with paper losses do not always have paper gains that neatly offset them, and often investors still have faith in a holding that is under water. The article investigates how investors can “have it both ways,” i.e., recognize the loss for tax purposes but keep the holding, and proposes four possible transactions, in addition to the two traditional methods employed by investors and often recommended by brokerage houses, which do necessitate a change in the payoff pattern.
- © 2001 Pageant Media Ltd
Don’t have access? Click here to request a demo
Alternatively, Call a member of the team to discuss membership options
US and Overseas: +1 646-931-9045
UK: 0207 139 1600