Tax Loss Harvesting

[GymnJuice]

She outlines several approaches to tax-loss harvesting. Doing it manually, using direct indexing, or implementing a long short program.

You can only deduct up to $3,000 of capital losses against ordinary income. But if you have recurring capital gains to offset these can be sheltered with no limits.

Unfortunately, she omitted a discussion of fees which can significantly erode the benefits. From what I've seen Schwab charges 0.40% and there's a fintech platform Frec offering it at 0.09%.

Long short strategies carry the highest fees at 1–2%. These get accessed through a fintech provider or via an SMA/RIA at your broker, which adds a middleman markup. The leveraged long short programs also introduce higher risk when there are market swings which can cause forced deleveraging.

Anyone doing any of this?

(hittable thumbnail, but looks like clickbait. She ain't that good looking in the actual video)

[IroNat]

She's very good looking.

>

Interesting topic.  Thanks for posting.

The potential risks associated with long-short tax-loss harvesting include higher risk from leverage, the complexity of managing short positions, and the possibility of incurring tax liabilities when transitioning back to a long-only portfolio. Additionally, investors may face increased fees that can diminish the overall tax benefits.

More...

https://www.glinepartners.com/post/long-short-tax-loss-harvesting-pros-and-cons

[GymnJuice]

She's very good looking.

>

Interesting topic.  Thanks for posting.

The potential risks associated with long-short tax-loss harvesting include higher risk from leverage, the complexity of managing short positions, and the possibility of incurring tax liabilities when transitioning back to a long-only portfolio. Additionally, investors may face increased fees that can diminish the overall tax benefits.

More...

https://www.glinepartners.com/post/long-short-tax-loss-harvesting-pros-and-cons

The exit strategy is a downside. With both Schwab and Frec long only direct indexing the exit is that you stop paying the fee (0.40%  or 0.09%) but then take full ownership of the hundreds of individual stocks in the portfolio. These holdings start proportional to the target index but without ongoing management the allocation will gradually drift away from a broad market ETF like VTI due to unequal performance across stocks. You could hold the basket indefinitely and ignore it, which is likely what I’d do in that scenario.

Exiting leveraged long short positions is more involved. Because they use margin and short positions unwinding requires addressing leverage and shorts. As I understand it you can initiate a slow, tax aware unwind from leveraged to long only directly in the Frec platform or inject cash to cover shorts and deleverage.

I spoke with an RIA at Schwab, and their suggested exit approach was broadly similar, ending up with the individual stock basket. However, it came with a sales pitch encouraging me to stay. Something that naturally raises suspicions.

[IroNat]

I would think some investment companies would offer funds that use this strategy.
From what I've read some hedge funds already do.
I think BlackRock does.

You'd have to decide if it's worth doing. 
Are you thinking of doing it?

[GymnJuice]

I would think some investment companies would offer funds that use this strategy.
From what I've read some hedge funds already do.
I think BlackRock does.

You'd have to decide if it's worth doing. 
Are you thinking of doing it?

Yes. At a minimum, I’ll go with the long only direct indexing. I am considering one of the leveraged options because I have a capital gains event coming up. That said, trading on leverage makes me uneasy. I’m much more of a 3 fund portfolio guy who just throws money in the market and ignores the swings. Anything more complicated than that doesn’t come naturally to me.

[Humble Narcissist]

She's very good looking.

>

Interesting topic.  Thanks for posting.

The potential risks associated with long-short tax-loss harvesting include higher risk from leverage, the complexity of managing short positions, and the possibility of incurring tax liabilities when transitioning back to a long-only portfolio. Additionally, investors may face increased fees that can diminish the overall tax benefits.

More...

https://www.glinepartners.com/post/long-short-tax-loss-harvesting-pros-and-cons

The only thing we care about in a woman......her looks.

[IroNat]

The only thing we care about in a woman......her looks.

It's a plus if she can cook too.

[Humble Narcissist]

It's a plus if she can cook too.

And fuck like a porn star.

[GymnJuice]

This doesn’t relate directly to tax loss harvesting or long short strategies. While researching other tax advantaged approaches, though, I came across the AQR Delphi fund, which allows investors to treat losses above the $3k limit as active losses against W2 income. That fund, and other strategies, are facing increased IRS scrutiny.

https://www.reuters.com/legal/government/us-treasury-flags-wall-street-tax-strategies-potentially-abusive-bloomberg-news-2026-07-21/

The U.S. Treasury welcomes innovation in financial markets, but will not tolerate tax ​strategies aimed at dodging U.S. tax rules, Treasury Secretary ‌Scott Bessent said on Wednesday, doubling down on a message delivered to Wall Street this week.

"Tax rules should reward investment, not abusive financial engineering," ​Bessent said in a posting on X. "USTreasury welcomes innovation ​in our financial markets, but we will not turn ⁠a blind eye to abusive Wall Street tax dodges or ​tolerate products designed to exploit our federal tax code."

Bessent noted ​that investors should think twice if presented with a tax pitch that sounded too good to be true. He added that Treasury was examining Wall ​Street tax products that may exploit the tax code and ​any tax strategies that may cross the line.

Senior Treasury officials made similar ‌comments ⁠earlier this week at an industry gathering in New York, warning that some of these products may be abusive.

In their remarks to the Wall Street Tax Association, the officials stopped short of ​announcing new guidance ​but said they ⁠expected a serious dialogue with the market before positions hardened and investors were placed at more risk.

The products ​under scrutiny include so-called 351 conversions, box-spread exchange-traded ​funds, ⁠products that offset ordinary income, and funds that avoid dividend income by flipping between other ETFs, the official said.

The comments come as ⁠tax-aware ​investment products have gained popularity among wealthy ​U.S. investors seeking to reduce tax liabilities.