1

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.

2

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.

  • 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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