| An investor should never sell stock simply for tax | | | | into your investment strategy. |
| purposes. There are far too many other important | | | | Check your previous tax returns. If you took losses |
| financial implications to consider when selling stock, | | | | in past years that exceeded the ceiling, you might |
| beyond taxes. This said, selling losing stock to offset | | | | want to claim those carry-forward losses now, and |
| gains could be an important option to consider within | | | | avoid selling any stock. |
| your financial strategy. Here are a few things you will | | | | After you have precisely determined the amounts of |
| want to know about selling stock to offset gains. | | | | your gains and losses, you will want to match those |
| First, you will want to calculate your gains by | | | | losing stock lots to best offset your gains. If you |
| subtracting the amount you paid for the stock from | | | | take excess losses from this or previous tax years, |
| the proceeds you received from selling that stock. | | | | you can use as much as $3000 of additional realized |
| Usually, your account statement will reflect gains and | | | | losses to offset ordinary income. |
| losses. If, for some reason, it does not, consult your | | | | When filing your taxes, use Schedule D of form 1040 |
| financial agent or your own records. | | | | to report your capital gains and losses. Your |
| Now, calculate your losses. Determine which securities | | | | transactions must all be separated into short-term or |
| are costing you money to hold. These are the assets | | | | long-term gains and losses. Long-term losses cannot |
| you should consider selling. Keep in mind that if you | | | | be used to offset short-term gains and visa-versa. |
| bought and sold the same stock over periods of | | | | You must only use stock of the same duration to |
| time, it may be reflecting a loss now, but, overall, it | | | | offset income. |
| could be an investment winner. Also, consider how | | | | Enter short-term carry-forward losses onto line 6 of |
| the losing assets fit into your portfolio; as stated | | | | Schedule D, and long-term carry-forward losses onto |
| before, you do not want to sell stock only for tax | | | | line 14 of Schedule D. Your total loss or gain is then |
| purposes. You may want to hold the stock if it fits | | | | entered on line 14 of your 1040 form. |