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Timely Tax Ideas from Barron's This Week

OPTIONS. NOVEMBER 29 (Tuesday) is the last day this year to DOUBLE-UP for tax-loss harvesting (TLH) this year. The doubling up can be by buying a fallen stock or cheaper options by 11/29/22 and then selling the older lot(s) by DECEMBER 30 (Friday), the last trading day of this year. AXP is used as an example. (Alternate is to immediately swap into something similar but not identical) (Tax-losses for individuals don’t expire and can be carried forward for years to offset future gains and up to $3K/yr in ordinary income)

REVIEW. Wash sale rules don’t apply to CRYPTOS (as they are considered property). Rules may be changed by the Congress in future. (Note – Wash sale disallows loss if a security or its options are traded within +/- 30 days)

ROTH CONVERSIONS are attractive tax-wise when the markets are down; taxes on conversions should be paid from taxable funds. Other benefits of Roth IRAs include no RMDs; TAX-FREE withdrawals in retirement (some limitations apply); tax benefits carry over to INHERITED Roth IRAs but now, most non-spouses must drain the Roth IRA within 10 years (spouses can retitle as their own). Seniors beware of Medicare IRMAA in conversion planning. This is by @LewisBraham.


  • +1. Appreciate this update all the time, always, yogi. Thanks.
  • Thanks for the heads up. Has anyone considered that if you were to sell (TLH) all your losses, when you re-buy you have just lowered your basis and will eventually pay more tax? My idea is that you need to selectively TLH.

    Perhaps an example: I bought at $50, I TLH at $40, I buy (something else with the equivalent worth) for $40. I take the $3k off every year but in trade, when I sell shares to live my basis is $10 less.
    To take it further, I write off $3k/yr for next 3 yrs but then sell at $50, and pay tax on the “gain”.
  • Instead of being selective for TLH, it is better to maximize TLH and not let the opportunity slip by. Yes, some of the losses would be used up from gains in those (and other) positions when markets rebound. In some cases, different things may have better rebound potential (elevator-down may be different than elevator-up). Bottomline is that with TLH at max, the taxable a/c become tax-free account for many years to come.
  • Another follow up,

    TAX STRATEGIES. Use tax-loss harvesting (TLH) this year for benefits in future years. Tax-loss CARRYFORWARDS don’t expire and can be used to offset future gains and up to $3,000/yr in ordinary income from net losses. Beware of WASH-SALE rule (to avoid +/- 30 day window for transactions). Use DOUBLE-UP strategy (buy to double position by November 29, sell the older lot on December 30, the last trading day of 2022), OR swap with something SIMILAR but not identical right away (easily possible with so many OEFs and ETFs). REINVESTING may cause small disallowances due to wash-sale, but they don’t spoil the entire TLH; one can also discontinue reinvestments to avoid this issue. With large declines in both stocks and bonds, consider TLH for all types of funds (stocks, bonds, hybrids). If you have losses in CRYPTOS, note that wash-sale rules don’t apply (but the IRS may not like immediate buys/sells). OTHER strategies: Delay/SHIFT income to lower tax years; use annual GIFTS of up to $16K/yr/person (2022), $17K/yr/person (2023) to avoid filing the Form 709 (complicated, but also doable); ROTH CONVERSIONS (immediate tax hit, but withdrawals are tax-free in retirement and no RMDs); CHARITABLE contributions.
  • More ideas this week, 12/10/22.

    TAXES and GIVING. The ESTATE exemption of $12.06/$24.12 million (single/joint) is for super-wealthy, but there are many others things that ordinary investors can do. ANNUAL gift EXEMPTION is $16K/yr/person ($17K in 2023) to avoid filing Form 709 (that is tricky but can also be done for larger gifts). Since 2018, standard deduction has been high (90% now just take standard deduction), so consider BUNCHING up charitable contributions (including large DAF contributions), Roth Conversions and other deductions for an itemizing-year. Older folks (70+) can use QCDs that also count for RMDs (72+). This has been a bad year but consider donating long-held APPRECIATED securities or those with rare profits in 2022 (energy). BEWARE that some relaxations for charitable contributions for 2020-21 have expired and don’t apply in 2022.
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