Re: Tax Loss Harvesting Bad for PP?
Posted: Thu Sep 24, 2020 11:13 am
If I'm understanding your argument correctly, I think you're misunderstanding the tax treatment.
Yes, gold is taxed as a collectible. That just means that 1) it is taxed as ordinary income with no preferential long-term rates, and 2) the tax cap is 28% even in the highest tax brackets. But (to my knowledge) it does not affect how tax loss harvesting and carry-forward losses work.
Sell gold at a loss, and you can use that capital loss to offset capital gains in other assets like stocks and bonds (and vice versa). Any excess losses can be carried forward just like any other asset. The 3k limit only applies to income (earned income, dividends, interest), not future capital gains. So any future capital gains from any asset can be fully offset by any capital losses you have carried over on the books with no 3k limit.
I'm not sure where you're getting the idea that the rules for gold carry-forward deduction limits are different than that for any other asset. Do you have a source for that?
BTW, if you happened to be audited I'd be surprised if the IRS didn't consider your proposed swap of GLD for IAU a wash sale. I'm no expert on that, but to be safe you might consider just sitting on cash for the 30 days.
Yes, gold is taxed as a collectible. That just means that 1) it is taxed as ordinary income with no preferential long-term rates, and 2) the tax cap is 28% even in the highest tax brackets. But (to my knowledge) it does not affect how tax loss harvesting and carry-forward losses work.
Sell gold at a loss, and you can use that capital loss to offset capital gains in other assets like stocks and bonds (and vice versa). Any excess losses can be carried forward just like any other asset. The 3k limit only applies to income (earned income, dividends, interest), not future capital gains. So any future capital gains from any asset can be fully offset by any capital losses you have carried over on the books with no 3k limit.
I'm not sure where you're getting the idea that the rules for gold carry-forward deduction limits are different than that for any other asset. Do you have a source for that?
BTW, if you happened to be audited I'd be surprised if the IRS didn't consider your proposed swap of GLD for IAU a wash sale. I'm no expert on that, but to be safe you might consider just sitting on cash for the 30 days.