Author Topic: actively trading stocks and TLH  (Read 2119 times)

jeromedawg

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actively trading stocks and TLH
« on: December 09, 2015, 12:15:03 PM »
Hey guys,

Was just curious if there are any strategies or issues with trading a stock and looking for tax-loss harvesting opportunities.

For instance, if I'm playing around with a tech stock that has been barreling downward (and I invested in it prior at a higher price but I want to keep investing in it at the lower price), is it a good idea to sell it all at the lower price and re-buy it? And if the price drops *again*, wash rinse and repeat?
And can this kind of trading be done multiple times in a day with stocks? Or is that considered "round-robin" ?

Crap, looks like it would be considered a wash-sale. If I already did something like this (e.g. a wash-sale) with my stocks, what recourse do I have? None or suck up the loss? Or just live with the fact that I can't file it as a loss and hope the stock rebounds, then sell it off later?
« Last Edit: December 09, 2015, 01:58:37 PM by jplee3 »

Mother Fussbudget

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Re: actively trading stocks and TLH
« Reply #1 on: December 09, 2015, 01:45:41 PM »
I'm not suggesting you try this, but it's something to think about...

If an investor is a stock he-or-she likes, and thinks that stock will be higher priced long-term, they *could* consider selling the STOCK, and investing in a different instrument based on that underlying stock - i.e. CALL options / CALL option LEAPS. 

If they sell the STOCK, and buy the LEAP on the same stock (example: sell NFLX @ $126, and buy NFLX Jan 2017 $125 CALL options/leaps), the stock sale / option purchase can not considered a "wash" transaction.  But this takes a bit more investing savvy than the average investor, and comes with it's own risks - such as:  a) the stock may not behave as expected long-term , b) it may behave as expected, but the TIME horizon is longer/shorter than expected, c) larger market factors *will* push the stockmarket up-or-down, and impact the price of the targeted investment.

Again... something to think about, not necessarily something to actually DO

jeromedawg

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seattlecyclone

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Re: actively trading stocks and TLH
« Reply #3 on: December 09, 2015, 02:39:26 PM »
Yes, if you have a wash sale you add the amount of your disallowed loss to your cost basis in the replacement shares so that you get credit for it eventually.

jeromedawg

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Re: actively trading stocks and TLH
« Reply #4 on: December 09, 2015, 02:58:06 PM »
Yes, if you have a wash sale you add the amount of your disallowed loss to your cost basis in the replacement shares so that you get credit for it eventually.

So it sounds like I shouldn't be too worried about it then. Thanks!

seattlecyclone

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Re: actively trading stocks and TLH
« Reply #5 on: December 09, 2015, 03:17:10 PM »
Yeah, wash sales aren't "bad" in that your loss is gone forever, but there's not much point to selling and re-buying your shares if you're going to have a wash sale. Might as well just buy and hold.

jeromedawg

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Re: actively trading stocks and TLH
« Reply #6 on: December 09, 2015, 03:54:21 PM »
Yeah, wash sales aren't "bad" in that your loss is gone forever, but there's not much point to selling and re-buying your shares if you're going to have a wash sale. Might as well just buy and hold.

yea... the particular stock i have i held shares in across 3-4 diff accts lol so i guess this is another way of consolidating haha... prob not the most tax efficient but ah well - lesson learned