Tax-Loss Harvesting
A strategy of selling investments at a loss to offset capital gains and up to $3,000 of ordinary income annually.
Detailed Explanation
Realized capital losses first offset realized capital gains of the same character (short-term or long-term), then up to $3,000 of ordinary income, with the remainder carried forward indefinitely. The wash-sale rule disallows the loss if substantially identical securities are repurchased within 30 days before or after the sale. Wash-sale rules currently do not apply to cryptocurrency transactions, though legislation has been proposed to extend them. Effective harvesting requires basis tracking, especially in taxable brokerage and crypto accounts.
Related TS CPA Service
Year-round, proactive tax planning that puts more money back in your pocket, not the IRS's.
Learn about Tax Planning & StrategyRelated Terms
Capital Gain
The profit realized from the sale of a capital asset such as stock, real estate, or cryptocurrency, taxed at preferential rates if held longer than one year.
Form 8949 (Sales and Other Dispositions of Capital Assets)
The IRS form used to report each individual sale or disposition of a capital asset, with totals flowing to Schedule D.
Tax Basis
The amount of investment in an asset for tax purposes, used to determine gain or loss when the asset is sold or otherwise disposed of.
Have a Question About Tax-Loss Harvesting?
Get a free, no-obligation answer from a licensed CPA. We respond the same day.
Get Your Free Quote