Wondering What to Do With Your Capital Losses – Try These Ideas

It was just days before Christmas and all through the land investors were scrambling to get the upper hand. Cries of “buy here” and “sell there” were heard throughout Wall Street, while every stockholder was busy trying to stay on his/her feet. Taxes and more taxes, they are such a pain, and we just don’t know what to do with our Capital gains.

Tis the Season for Deciding

This time of year is always important when it comes to capital gains, and losses. Many investors have both gains and losses at the end of a given year and likewise, many investors aren’t too sure what to do about those gains and losses. If you have a lot coming to you in capital gains and you don’t have a lot of losses to offset those gains, then you are probably going to just have to take your medicine so-to-speak and pay your taxes on the gains. However, if you have losses from poor performing stocks or if you still have carry-forward losses from 2008-2009, then you can help offset those gains by selling off your less-successful stocks or applying those carry-forward losses to this year’s return.

To Use Your Losses Now Or Later, That Is the Question

However there are some other factors to consider when it comes to taking your capital losses or not. So the question is what should I do with my capital losses this year? In order to answer this question there are several other questions to consider.

  • Should you recognize all of your unrealized capital losses before the year is over? – It’s a good idea to recognize your losses to the same degree as your gains, plus $3,000.
  • Is it a good idea to save up capital losses and use them to offset capital gains down the road? – Typically, it is not a great idea to stockpile your capital losses, because it does not offer much in the way of benefits. However, there are some situations where using this strategy could be effective. If you think there’s a good chance you will recognize a large capital gain in 2015, plus, your current securities losses will be gone in 2015 because of price increases, and you use the money from selling securities losses to again buy securities that do not reap a gain in 2015, then stockpiling losses could be an effective strategy.
  • What other circumstances would be bad for recognizing capital losses in order to offset long-term capital gains? – Taxpayers who fall into the 15 percent tax bracket and pay no income tax on long-term capital gains that have been recognized are usually better off waiting to recognize losses until after 2014, because the nontaxable income would be offset by the capital losses.

Contact GROCO for More Help

Of course, these scenarios are just some of the many possibilities when it comes to recognizing your capital losses and gains. Every taxpayer is different and each person’s investment portfolio is unique. If you have other questions and concerns regarding your capital losses and gains, then you should contact the professionals at GROCO for help. Just contact us or call us today at 1-877-CPA-2006.