Programming note: The Tax Update will be taking a long weekend. Back Wednesday.
The President hasn’t signed the extender bill yet. Everyone says he will sign HR 5771, but a lot of taxpayers will feel better when its official. You can frantically refresh the Whitehouse.gov “Signed Legislation” page to watch for it.
So you cashed out some stock market gains this year. That makes it a good year to cash out your losers too. Capital losses can be deducted on individual returns to the extent of capital gains, plus $3,000. That means if you have some unrealized losses on other investments, paying tax is optional to that extent.
If you don’t want to volunteer to pay those extra capital gain taxes, here are some tips for deducting your investment losses:
The loss has to be realized in a taxable account. Selling a loser in an IRA or 401(k) plan doesn’t give you a deductible loss.
-Be sure the trades are executed no later than December 31. For long positions, the trade date controls.
-If you have a loss on a short sale, the settlement date has to be no later than December 31.
-You can’t buy the same stock within either 30 days before the sale or 30 days afterwards. If you do, the “wash sale” rules disallow your loss. The IRS says this rule applies even if your loss is in a taxable account and your gain is in a non-taxable IRA.
Related: Topic 409 – Capital Gains and Losses (IRS.gov)
Robert Wood, Ranking Facebook, Boris Johnson, Google On Taxes (Diplomatically Please). Well, Boris Johnson is the only one who doesn’t collect corporate welfare from me via the State of Iowa.
Jim Maule, Code Size Claim Shrinks But Not Enough. The code is bad enough. There’s no need to exaggerate.
Peter Reilly, First Circuit Loss For Transgender Prisoner May Have Positive Tax Implications For Others. Peter can find tax implications in places I wouldn’t have thought to look.
Robert D. Flach gets us Buzzing into the big holiday week.
Kristopher Hauswirth has been pondering the Farm Bill:
Commodity producers with the resources and/or level of sophistication to confidently optimize their farm bill decisions least need the safety net. While the smallest and/or least sophisticated producers will have to stumble into positive outcomes, if they benefit at all.
The greatest beneficiaries of this law are the people who have serve no public interest in benefitting from a program of this nature. They are the people and entities that create the system, unlock the riddle, and administer the program: lobbyists, lawmakers, attorneys, accountants, and government agencies.
So it’s pretty much like the tax law, then.
William McBride, New Research Shows Multinational Corporations Have No Tax Advantage Over Domestics (Tax Policy Blog). “The study calls into question policy makers’ emphasis on international “profit shifting,” including the elaborate efforts by the OECD and rich-country governments to crack down on MNCs exclusively.”
William Gale, Magical Thinking on Tax Reform (TaxVox). “Tax reform is important but policy makers and the public should not be misled about its true trade-offs. Unfortunately, the benefits of reform are more modest than its backers sometimes claim and its costs are often higher.”
TaxProf, The IRS Scandal, Day 589
Clint Stretch, Did Next Year’s Holiday Gift Shopping Just Get Easier? (Tax Analysts Blog). “President Obama’s move to normalize relations with Cuba may add Cuban cigars and Cuban rum to next year’s holiday gift possibilities.”
Sebastian Johnson, What to Buy the Discerning Policy Wonk in Your Life: The ITEP/CTJ Holiday Gift-Giving Guide. The Tax Shelter Coloring Book!
Career Corner. Be Social, Don’t Skip the Party, and Other Redundant Holiday Party Advice (Adrienne Gonzalez, Going Concern). “Now, let’s talk about alcohol. Just because you can get blitzed on Fireball shots doesn’t mean you should.”