As the title says, will I have any tax consequences (aside from paperwork) if I offset an equivalent value worth of long-term gains with short-term losses? Assuming no other externalities except an annual salary.


Assuming you have no loss carryover from 2018, it is correct that you will have zero capital gains tax if your gains and losses (long-term and short-term together) net to zero. However, if the long-term gain has already happened in 2019 and you're deciding whether to realize the short-term loss, you may be able to do better than zero: If you wait until 2020 for the loss, your 2019 gain will be taxed at the reduced long-term rates, whereas your loss will be able to offset any potential (higher-taxed) short-term gains as well as up to $3k of ordinary income in 2020.

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  • I do not fully understand the second half of your statement. What do you mean by "reduced long-term rates"? – quantfinancequest Dec 26 '19 at 22:10
  • @quantfinancequest "The long-term capital gains tax rates are 0%, 15% and 20%, and they’re typically much lower than the ordinary income tax rate." source – nanoman Dec 26 '19 at 22:17
  • I understand. Thank you! – quantfinancequest Dec 26 '19 at 22:19

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