accountants ? for you

[skiierx]

How much can you write off a year on stock losses? I plan on selling one of my dog stocks today that I have held for the past few years (3-4).

Thanks

[Honclfibr]

3k in a year, but that's Losses - Gains, so if for example you had 2k of gains and 5k of losses you'd still be able to write off the 3k.

Also, if you have (or can realize) short term capital gains, it would be best to offset your long term loss against those, since if you just take the loss you will only get a 15% tax break as you've held the stock for more than a year, therefore it is considered long term capital loss and is not taxed at your ordinary income level.

[skiierx]

Thanks Darrel! I do not plan to sell any stocks I have gains on right now. They are the house fund (whenever that day comes). The stock I plan to sell is my EMC stock, the loss is under 3k so I should be all set. That will enable me to continue to itemize my returns.

[Honclfibr]

Actually, I take that back, I did a little more research since I wasn't sure and it appears that even though the loss is on a long-term investment, you can subtract the (up to) 3k in loss from your income, which is preferential to offsetting long-term capital gains.

I guess this is to prevent people from fire-selling their losses right before the 365 day mark...either way, it's an advantage to you, means that the 3k will offset your ordinary income just like a deduction.

Also, just to be clear, it's *not* a deduction, you *must* report any capital gains and losses to the IRS whether or not you itemize...on the flip side, you can choose to itemize or take the standard deduction regardless of what your capital gains or losses are...they don't affect the deduction...so if you don't have many deductions this year it still may benefit you to take the SD rather than itemizing...

[skiierx]

I will be close to the SD without the sale but this will make sure I am over it. It might not be listed undwr the standard deductions page but it is in the number (if I remember correctly).

It really doesn't matter anyway...the stock is now sold! I have been debating on the sale this whole year. It was not doing anything at all and the 52 week high was not that great with what I sold it at today, for the small fee I paid to sell I can still go back next week and buy it again less 2 shares.

[Honclfibr]

Originally posted by skiierx
It really doesn't matter anyway...the stock is now sold! I have been debating on the sale this whole year. It was not doing anything at all and the 52 week high was not that great with what I sold it at today, for the small fee I paid to sell I can still go back next week and buy it again less 2 shares.

Careful though, there's a tax law called the "wash sale" rule which says that you cannot sell a stock for the tax loss then immediately buy it back. What it boils down to is, if you want to claim the tax loss you need to wait 31 days after selling the stock before buying it back. So if you sold it today, wait till early february before buying back in and you're safe from the wrath of the IRS.

[skiierx]

That I was not aware of...thanks.