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  • Another TLH question

    Thanks in advance for the help

    I bought a fair amount of total market ETF just before the drop last week. I have the following questions about trying to TLH now.

    Am I correct that if I sell these and take a short term loss, I can see earlier purchases at a short term gain and cancel these? In other words it is not just long term gains and losses and if I stick to just short term purchases I do not have to worry about mixing and matching long and short term gains/losses?

    The amount of loss this week is not staggering but is there any reason not to do this? I know one argument is that I will just be resetting the cost basis for larger long term gain in the future but we tend to donate a fair amount of equities to charity each year and it would be helpful for that reason. Any other potential reasons not to TLH even if not a huge dent in my portfolio or tax bill?

    Thanks

  • #2
    TLH is a perfectly reasonable strategy in a market downturn. Yes, it is fine to mix short term and long term losses. As your TLH harvest credits accumulate, you will first match to relevant short and long term gains, then apply $3k any given year against taxes on earned income. If you haven’t already, please review this tutorial. https://www.whitecoatinvestor.com/tax-loss-harvesting/

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