Tax Gain/Loss Harvesting
Selling securities at a loss to offset a capital gains tax liability. Tax gain/loss harvesting is typically used to limit the recognition of short-term capital gains, which are normally taxed at higher federal income tax rates than long-term capital gains.
Also known as "tax-loss selling". Investopedia Says:
For many investors, tax gain/loss harvesting is the single most important tool for reducing taxes now and in the future. If properly applied, it can save you taxes and help you diversify your portfolio in ways you may not have considered. Although it can't restore your losses, it can certainly soften the blow. For example, a loss in the value of Security A could be sold to offset the increase in value of Security B, thus eliminating the capital gains tax liability of Security B. Related Terms:
Capital Gain
Capital Gains Tax
Capital Gains Treatment
Capital Loss
Capital Loss Carryover
Long-Term Capital Gain Or Loss
Realized Gain
Realized Loss
Separate Account
Tax Liability |