Year-End Tax Planning 2018: Superficial Losses

This is the fourth inour series about year-end tax planning.

We talked last weekabout selling your investments before the end of the 2018 year in order toreduce the tax on the capital gains that you have already in this year. However,you have to watch out for the superficial loss rules.

What this means is that if you sell your Apple shares in order to claim a loss then you cannot buy any Apple shares within 30 days of the date of sale where you recorded this loss. If you sell shares to claim the capital loss then you cannot buy themback within a time period of 30 days before the sale and 30 days after the sale. So be careful, you sell the shares to get the loss and you won’t get the loss if you have repurchased the shares within the time period.

When you are considering selling investments in order to get a loss, a good strategy is to sell shares that you don’t have to buy back, to avoid this risk of your capital loss being considered to be superficial loss and therefore not deductible. Talk to your investment advisor and your tax preparer before you use this strategy to reduce your taxes. fff

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