Tax-Loss Harvesting
Workflow
Step 1: Identify Candidates
Scan taxable accounts for positions with unrealized losses:
| Security | Asset Class | Cost Basis | Current Value | Unrealized Loss | Holding Period | % Loss |
|---|---|---|---|---|---|---|
| ST / LT |
Prioritize by:
- Largest absolute loss (biggest tax benefit)
- Short-term losses first (offset short-term gains taxed at ordinary income rates)
- Positions with the largest % loss (less likely to recover quickly)
Step 2: Gain/Loss Budget
Calculate the client's tax situation:
| Category | Amount |
|---|---|
| Realized short-term gains YTD | |
| Realized long-term gains YTD | |
| Realized losses YTD | |
| Net gain/(loss) position | |
| Carryforward losses from prior years | |
| Target harvesting amount |
Tax savings estimate:
- Short-term losses × marginal ordinary income rate
- Long-term losses × capital gains rate
- Up to $3,000 net loss deduction against ordinary income
- Excess carries forward
Step 3: Replacement Securities
For each harvest candidate, suggest a replacement that:
- Maintains si…
