I started investing in the stock market in Dec of 2013 (last year). I bought 5 stocks - 3 of which are in the red (and which I want to sell) and 2 of them are in profit.
My understanding is that in order to get maximum benefit, I must sell the 3 losing stocks before the holding period of one year so as to avail of a short term loss tax benefit on them. Is that correct? The total loss on the stocks is about 1000$.
I currently have no other short or long term gains on any stock for this year.
Should I sell the 2 profitable stocks (current profit is 400$) after the holding period of 1 year but before Dec 31st 2014 ? Or wait until Jan 2014 to sell them (so as to get maximum benefit for 2014 taxes)?
That is, will the short term losses apply against the long term gains if I sell the 2 profitable stocks before Dec 31?
Related Question (Added)
Thank you all for your responses.
Another related question .. For the profitable stocks, I see dividends have been issued and reinvested. The trade dates show up as follows (one example): 12/18/2013, 03/14/2014, 06/13/2014, 09/16/2014
Does this 'extend' my holding period date to 09/16/2014 (instead of 12/18/2013)? In other words, after Jan 1, when I sell off all of the stock will all of it qualify for a long term gain or will some of it (the dividend reinvestment) be considered short term or will all of it be considered short term?
I guess for a loss it does not matter if I incurred dividends, as they will still fall under the 1 year holding period when I sell (and will qualify for a short term loss)?