Author Topic: Selling newly bought stock quickly to claim loss?  (Read 2323 times)

Fields of Gold

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Selling newly bought stock quickly to claim loss?
« on: March 07, 2018, 03:08:38 PM »
Is it allowable to claim losses by doing this

start with no purchase history of any stocks.
Buy Apple stock.  Stock value drops $1000.  Sell it that day.  Wait for money to settle.
Later that week, buy Netfilx stock.  Stock value drops $1000.  Sell it the same day.  Wait for money to settle.
Next week, buy Microsoft.  Stock value drops $1000.  Sell it that day.  Wait for settlement.
The week after, buy Google stock until it drops $1000.  Then sell it immediately.  Put cash into money market for rest of year.

Does this qualify for a tax write off of $3000 this year and a carry over $1000 (approximately) for next year? 

just wondering

« Last Edit: March 07, 2018, 03:14:34 PM by Fields of Gold »

Rob_bob

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Re: Selling newly bought stock quickly to claim loss?
« Reply #1 on: March 07, 2018, 04:08:40 PM »
In a nutshell yes, if in a taxable account.

MaaS

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Re: Selling newly bought stock quickly to claim loss?
« Reply #2 on: March 07, 2018, 05:34:07 PM »
Is it allowable to claim losses by doing this

start with no purchase history of any stocks.
Buy Apple stock.  Stock value drops $1000.  Sell it that day.  Wait for money to settle.
Later that week, buy Netfilx stock.  Stock value drops $1000.  Sell it the same day.  Wait for money to settle.
Next week, buy Microsoft.  Stock value drops $1000.  Sell it that day.  Wait for settlement.
The week after, buy Google stock until it drops $1000.  Then sell it immediately.  Put cash into money market for rest of year.

Does this qualify for a tax write off of $3000 this year and a carry over $1000 (approximately) for next year? 

just wondering

Yes, that's how it works.

But, if you don't put it into a substantially better investment, you've just lost about 3k.

It's much more straight-forward with index funds IMO. Take a loss on a total world index and throw it into a total world index ex US.  Sell from SP 500 to a total US market index, etc.

Nate79

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Re: Selling newly bought stock quickly to claim loss?
« Reply #3 on: March 07, 2018, 10:28:31 PM »
It's not clear if you are asking if it is ok to claim these losses (yes it is) or if your strategy is to choose companies whose stock will go down in the hopes of saving a little bit of taxes. It would be much better to only buy stocks that go up.......

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ZiziPB

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Re: Selling newly bought stock quickly to claim loss?
« Reply #4 on: March 08, 2018, 03:54:48 AM »
You need to read up on tax loss harvesting...

yachi

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Re: Selling newly bought stock quickly to claim loss?
« Reply #5 on: March 08, 2018, 07:15:22 AM »
Is it allowable to claim losses by doing this

start with no purchase history of any stocks.
Buy Apple stock.  Stock value drops $1000.  Sell it that day.  Wait for money to settle.
Later that week, buy Netfilx stock.  Stock value drops $1000.  Sell it the same day.  Wait for money to settle.
Next week, buy Microsoft.  Stock value drops $1000.  Sell it that day.  Wait for settlement.
The week after, buy Google stock until it drops $1000.  Then sell it immediately.  Put cash into money market for rest of year.

Does this qualify for a tax write off of $3000 this year and a carry over $1000 (approximately) for next year? 

just wondering

This is my strategy, but my stupid stock picks keep gaining and messing up my mojo then the tax guy comes knocking.
« Last Edit: March 08, 2018, 07:19:19 AM by yachi »

LessIsLess

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Re: Selling newly bought stock quickly to claim loss?
« Reply #6 on: March 08, 2018, 07:21:50 AM »
I think OP is trying to avoid getting tripped up by the "wash sale" rule.  As long as it's a different ticker, you're in general safe even if the sale/purchase happens within a 31 day span.  But do take caution.

Aggie1999

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Re: Selling newly bought stock quickly to claim loss?
« Reply #7 on: March 08, 2018, 12:39:13 PM »
Yes, that's how it works.

But, if you don't put it into a substantially better investment, you've just lost about 3k.

It's much more straight-forward with index funds IMO. Take a loss on a total world index and throw it into a total world index ex US.  Sell from SP 500 to a total US market index, etc.

Anyone here taking advantage of this with index funds over the last month or so? I dropped a good chunk of money into total US and total international in Jan 2018. Thinking it might be a good idea to do a little tax loss harvesting. Move the total US into SP500. Not sure what fund to move the total international into.

Dicey

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Re: Selling newly bought stock quickly to claim loss?
« Reply #8 on: March 08, 2018, 12:53:13 PM »
OMG! This is only theoretical, right? You're not actually buying individual stocks and doing so without any kind of long term mission statement?

josh4trunks

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Re: Selling newly bought stock quickly to claim loss?
« Reply #9 on: March 08, 2018, 01:18:05 PM »
Yes, that's how it works.

But, if you don't put it into a substantially better investment, you've just lost about 3k.

It's much more straight-forward with index funds IMO. Take a loss on a total world index and throw it into a total world index ex US.  Sell from SP 500 to a total US market index, etc.

Anyone here taking advantage of this with index funds over the last month or so? I dropped a good chunk of money into total US and total international in Jan 2018. Thinking it might be a good idea to do a little tax loss harvesting. Move the total US into SP500. Not sure what fund to move the total international into.

I'm new to taxable accounts (just started this year) but, yes I have harvested losses every chance I get. Went from VXUS > VEU > VSS. I have been buying more every time I get paid so some of my VSS purchases have gained and some have lost. Once 31 days from buying any of my winners have passed I am going to sell any leftover VSS losers for VXUS again. I also made sure that date is 31 days from selling VXUS for a loss.
Make sure set your selling method to Spec ID and do not reinvest dividends.
This article helped. http://fairmark.com/capgain/wash/wsreplac.htm

It has been fairly time consuming and I am still getting my head around the process. But this isn't something I plan on doing alot. Just during volitaile times, when my extra income has nowhere better to go.

Rocketman

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Re: Selling newly bought stock quickly to claim loss?
« Reply #10 on: March 08, 2018, 01:26:05 PM »
The timeline for a stock loss to count as a STCL (short term capital loss) is less than one year, not 31 Day’s. You should sell items in month 11 that are running a loss, so you capture the short term loss.

Eric

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Re: Selling newly bought stock quickly to claim loss?
« Reply #11 on: March 09, 2018, 06:44:55 PM »
OMG! This is only theoretical, right? You're not actually buying individual stocks and doing so without any kind of long term mission statement?

I don't know.  I'm hoping he can put it into practice.  It would a very useful skill to be able to buy a stock and have it immediately drop by $1000.

Fields of Gold

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Re: Selling newly bought stock quickly to claim loss?
« Reply #12 on: March 09, 2018, 08:37:28 PM »
Not hard to lose $1,000 on an individual stock if one buys-in with $100,000 and it drops 1% within the day.  Happened earlier this year with AAPL.  Some shareholders did sell, maybe all they held.  But AAPL rebounded and is now at its all time market high (at least for now), up about 16% in a month.
« Last Edit: March 09, 2018, 08:45:33 PM by Fields of Gold »