Investor Glossary-tax sellingInvestor Glossary-tax sellingInvestor Glossary-tax sellingInvestor Glossary-tax sellingInsightful stock market charts - Click here
investor
Categories    # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Tax Selling

The HTML to link to this page
 

Tax Selling, also known as tax-loss harvesting is the practice whereby an investor sells shares of an asset on which he has a negative cost basis in order to net the resulting capital loss against capital gains in other assets. The effect of tax selling is to reduce the investor's overall capital gain tax liability by offsetting gains with losses. Investors must have held the asset for at least 30 days prior to engaging in tax selling.

One possible danger of tax selling is the potential to violate the wash sale rule. This IRS rule penalizes taxpayers who sell an asset for purposes of tax selling and repurchase it again (or a "substantially identical" asset) within 30 days by disallowing the tax loss. Tax selling is usually conducted around the end of the calendar year as the taxpayers overall tax situation for the year becomes more evident.

For more information on tax selling, as well as wash sale rule restrictions, please see IRS publication 550.



Rate this tax selling definition...

Learn about investing with the Investor Glossary Term of the Day


Click here for insightful stock market charts. Where is the market headed? The answer may surprise you. Find out
with the exclusive & Barron's recommended charts of Chart of the Day.


Popular Terms: in escrow, balance sheet, current ratio, implied volatility, ex-dividend, APR, open position, reverse mortgage, deferred revenue, real GDP, wholly-owned subsidiary, inflation, Zero Cost Collar, Key Rate Duration, average price per share, VIX, limit order, labor relations, command economy, quality assurance, LIBOR, debt service coverage, FTSE, phantom income, 1031 exchange, ex-dividend date, per diem, stock split, stock market close, minority interest, cancelled check, covered put, dividends payable, 1035 exchange, class C shares, diluted share, required rate of return, margin rate, retained earnings, EBITDA, FICO score, 144a, deferred tax, risk management, option premium, annual return, 401a, irrevocable trust, liquidity ratio


Home | Term of the Day | Suggest a Term | Chart of the Day | Dogs of the Dow
Investor Glossary Index >>> # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
©2004-2014 Investor Glossary - All rights reserved - Terms of Use