Tax Harvesting Same Ticker Different Brokers

I own the same stock at different brokerages, each broker has a different cost/share because I bought the stock at many different times across different brokerages.

I have unrealized gains on some brokers and one broker is still under water.

If I sell the shares at the broker’s that will have realized gains but don’t sell at the one I am under water still will I have any problems because I want to capture some gains so I don’t have a huge carry over loss for the year.

thanks!

If I sell the shares at the broker’s that will have realized gains but don’t sell at the one I am under water still will I have any problems because I want to capture some gains so I don’t have a huge carry over loss for the year.

Are you going to be buying any of the stock (including things like dividend reinvestment)?
Because if you are, then you need to think about wash sales.

If you are not doing any buying, then there’s no potential for wash sales.

Personally - I prefer to carry over loss from one year to the next and use $3k of it against regular income.
But if you are looking to have some capital gains that will “use up” your losses, you can specify lots which have a gain as the ones to be sold.
When you specify which lots of stock are sold, you’re using the basis for those lots - and it has no interaction with other lots you are holding at the same (or different) brokerage. (if there’s lots you are buying within ~30 days before/after - see again wash sale rules)

2 Likes

thank you so much for reply so like I thought I won’t have any problems with the sales and gains I had.

so the wash sale rule applies when there are gains, I still have to wait 30 days to buy the stock?

It’s confusing because if I don’t what will they do, negate any losses that I had from the sale (I didn’t have any losses I had only gains) Or maybe they won’t let me count the capital gains on my taxes?

The stock is RBLX so there no dividend.

I did not want to carry over $30,000 of losses that is ten years of $3,000 I just didn’t want to do that. If I had a crystal ball that told me I would have the next 10 years all have gains and no losses then I would do it but I don’t have a crystal ball.

so the wash sale rule applies when there are gains, I still have to wait 30 days to buy the stock?
No - wash sale is only if you have losses on what you’re selling.

I did not want to carry over $30,000 of losses that is ten years of $3,000 I just didn’t want to do that. If I had a crystal ball that told me I would have the next 10 years all have gains and no losses then I would do it but I don’t have a crystal ball.

Lets say your income is $100k
If you sell $30k worth of gains now, you won’t pay $4.5K in taxes while using up those LT cap loss carryover.

OTOH, if you carried over the loss, over the next 10 years you’d save $3k * 24% = $720/year for $7.2k saved over the 10 years.

Now that sounds like a reason to wait and just carry it over.
But if you think it’s good idea for you to have less of the stock, then I’d still sell the stock.

2 Likes

that makes sense assuming no other years in those 10 years have any losses, which I would bet all $30,000 says that is not true.

If I think even with my sale of the stock and using those gains to offset 25% of the losses, I will still have 7 years of $3k that I can use, instead of 10 years. Within those 7 years I will add up other losses maybe in year 5 I have a decent one or maybe 6 or maybe next year, who knows. 3k just isn’t enough, the last thing I want is to have losses that I can not even out when I’m on my deathbed, that will make me die earlier knowing the government got over on me.

Pick stocks that only go up. If they don’t go up don’t buy them.

4 Likes

the last thing I want is to have losses that I can not even out when I’m on my deathbed
Don’t die.
:smiley:

that will make me die earlier knowing the government got over on me.
Ok - so let’s actually look at what happens.

Scenario 1:
Recognize some gains - don’t pay taxes on them - rebuy same stock - die in 5 years.

Scenario 2:
Not recognize some gains - die in 5 years.

In scenario 1 your basis on your re-bought shares is now $7k higher than it was before (lets say you originally bought for $50k, sold for $57k, rebought for $57k.
You pay $0 additional in taxes for those sell and re-buy transactions
And in 5 years you die and your heirs inherit the stock that’s now at $70K, and therefore their basis is $70k.

In scenario 2 you don’t sell/buy the shares - so you have extra $7k of unused cap loss rollover still on the books when you die.
The stock is still worth $70k - your heirs still get the new basis of $70k for the stock, and it’s any different than scenario 1 for the IRS getting more (or less) money from you.

Now lets say you die after 9 years instead. (lets call those 1B and 2B)

Now you get to use up the carryover against regular income for more years in scenario 2B.
Lets say you have some more cap gains on some other stocks or mutual funds that you really want to sell, so you only get 2 more years of cap loss carryover compared to 1B.
If your marginal tax rate is 24% in those years, that means you have ~$1.4k more in your checking account which your heirs inherit.

And the stock basis in all cases still is the same because it gets the step up when you die.
So the IRS doesn’t “get one over on you” (ie. benefit) by you not using up your cap loss carryover on gains.

SO - IMO still best option is to not add unneccessary cap gains and use those losses against regular income.
And I’ll reiterate my previous point - if you think it’s good idea for you to have less of the stock, I’d still sell the stock.

1 Like