I have some shares where I have big losses and others with big gains. I want to get rid of the shares with big losses completely, but want to use the tax deduction. Can I also sell the shares with big gains and rebuy them? Is that part of the wash sale rule or is that excluded?

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    Wash-sale rule only applies to losses, not gains. So you can't harvest gains to offset losses that would be negated by the wash rule.
    – D Stanley
    Aug 22 '17 at 15:24
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    No - because gains on share A does not offset losses on share B.
    – ssn
    Aug 22 '17 at 15:27
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    Why are you selling the gains? That would raise your taxes. Why not just sell the losses and take the loss deduction?
    – D Stanley
    Aug 22 '17 at 15:29
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    If you have no / little short-term gain and really want to minimize your taxes this year, sure. But I'd still look at the long-term picture and either: 1. sell just enough losses to cover short-term+3k and hold the rest to sell for future short-term and regular, or 2. sell it all and just roll it over to future years where it can offset more. The way I see it, long-term gains is the lowest-taxed money you'll ever have, so don't bother / try not to offset it when you can offset income taxed at a higher rate.
    – Kevin
    Aug 22 '17 at 16:52
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    Also consider that resetting your basis that way resets the capital-gains clock. That means if for some reason you sell it within the next year, any gain from there will be taxed at the higher short-term rate.
    – Kevin
    Aug 22 '17 at 16:55

Say you have $6K in losses, and $8K in gains. It's clever to use gains to offset losses and vice versa, but consider.

You take $3K/yr loss. It offsets 33% marginal rate income. For 2 years.

You take $8K in gains in other years (not when you take any loss) and you pay long term cap gain at 15%.

This should answer your question.

  • That makes sense. If we are talking very large numbers than it would take decades using the 3k limit, right? Am I missing anything?
    – mergesort
    Aug 22 '17 at 21:20
  • Yes, I was taking losses every year until recently from the dotcom bubble. If the number is large you may not want to wait for the decades that it could take it to use them up and in that case just offset them with the capital gains that you have. Aug 23 '17 at 3:24

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