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Tax Loss Harvesting and Wash Sales

While many investors had realized gains in 2023, perhaps not all of your investments increased in value. To offset some of the realized gains, investors often sell securities with unrealized losses at the end of the year to offset the gains from their realized capital gains. Some investors who remain bullish in their outlook decide buy back some or all of these stocks or securities in the following year to express their long term outlook on these securities. If you find yourself in this situation, you must be aware of the wash sale rules of §1091. IRC Section 1091(a) disallows a deduction from the sale or disposition of a stock or security if, within a period beginning 30 days before the date of sale and ending 30 days after the date of sale, the taxpayer acquires substantially identical stock or securities. Instead the basis of the newly acquired securities are increased by the realized losses.

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