Tax-Loss Harvesting Alpha

Tax-loss harvesting employs a strategy of selling positions in securities with losses with the goal of generating capital losses that can be used to reduce taxes. The Internal Revenue Code permits capital losses to be netted against capital gains in the year when they occur. Unused losses can be carried forward indefinitely, deductible against future net capital gains plus an additional $3,000 deductible against ordinary income per year.
Since long-term capital gains are often taxed at lower ra…

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