Are you looking for a few extra tax deductions before the
end of the year? Take a look at your stock portfolio for investments that
are sitting in a loss position. Many people have bank or energy company
stocks that are below or far below the price at which they purchased
them. Anytime these stocks are sold for a loss, that loss can be used to
offset income or gains from stock sales. To the extent that your losses
outweigh your gains, you can only deduct $3,000 more per year than your gains,
but the left-over losses will carry forward indefinitely, able to be used as a
$3,000 deduction per year, or until that windfall stock gain that we all hope
for every year.
What if you are thinking, “But I think this stock will go
back up” or “I feel really attached to this company stock and don’t want to
leave them.” If you don’t expect the stock to surge in the next 30 days,
wait the required 30 days so as not to come into conflict with the wash sale
rules, and then re-purchase the stock with the proceeds you have from your
sale. You will own the stock again, and you will be putting your losses
to use as a deduction against your income.
John Robert Voynich, CPA
