End of year tax planning for 2016
With the end of the year coming up quickly I decided to sell a couple of companies that I have losses in and buy them back in early January to lock in those losses. Buying back the same stock is possible if you wait over 30 days to buy it back. You could buy back a similar equity if it is not substantially the same, per IRS rules.
This means that if you own, let’s say, a small cap ETF from one company that you sell, you could buy back immediately a small cap ETF from a different company. In fact, this is how many of the roboinvesting platforms perform their regular tax lost harvesting. By doing it this way you really don’t lose out on anything since the new ETF has also likely traded pretty much in line with the one you’ve decide to sell. But for a single stock, you have to wait out the 30 days.
I’ve decided to do this now since some of these stocks have increased along with the general market since the election. I’m hoping that I can sell them near a relative short term “high” and then buy them back for slightly less. If not, the tax benefits will help either way. Since starting my new job I’ve jumped up a couple of tax brackets, which generally happens for good reasons (i.e., higher income), but it also means that I’ll be paying more in taxes per year than I made as a fellow!
The stocks that I’ve decide to sell are KKR, AMGN, and GILD. I have losses of around $1,000 in each of these. I sold KKR today, December 7th. I’m going to wait until after my AMGN dividend is reinvested (so as to avoid the wash-sale rule), so I’ll be selling that at the end of week or earlier next week. For GILD, I’m going to wait closer to the end of the month since I currently have an open option trade on it and may be assigned the shares at the end of the month if it stays below 73 and I don’t roll it forward.
What kind of end-of-the-year preparations are you guys doing?