If I have a stock that tanked... can I sell at a loss and claim the loss on taxes?

[mrpaseo]

I have never sold a stock without taking a profit (I'm not a genius, I usually just wait out the dips and sell in the green). If I sell a stock with the loss of approximately $2000 how would that benefit me tax wise?

Thanks,
Ray

[supercar]

If it is not a wash-sale, then you can claim this $2000 in tax deductions as loss. You can claim up to $3000 in loss in a tax year. If it is more than $3000, you can claim the rest of it next year.

[Petunia 100]

Also, the loss must have happened in a taxable account, not in a tax-sheltered account.

[kork13]

the biggest tax benefit is that you can offset your investment gains with your investment losses. so if you have $5k in gains and $2k in losses, you're only taxed on $3k.

[mrpaseo]

the biggest tax benefit is that you can offset your investment gains with your investment losses. so if you have $5k in gains and $2k in losses, you're only taxed on $3k.

Since I did not sell any stocks this year, I will not be able to offset any profits but this will be my highest income year and was looking to see if I could offset that somehow (Besides IRAs). Can I offset income or should I sit on the stocks (Truthfully they were a gamble and most likely will not go into the green again).

Thanks,
Ray

[kork13]

Since I did not sell any stocks this year, I will not be able to offset any profits but this will be my highest income year and was looking to see if I could offset that somehow (Besides IRAs). Can I offset income or should I sit on the stocks (Truthfully they were a gamble and most likely will not go into the green again).

Thanks,
Ray

Yes, that's where the $3k/yr limit comes in. You can claim up to $3k/yr in investment losses that directly offsets ordinary income. You can carry over losses to following years if required, but since you've only got $2k in losses, that's no factor for you.

[disneysteve]

Since I did not sell any stocks this year, I will not be able to offset any profits

Do you own any mutual funds that will have capital gains distributions?

[mrpaseo]

Do you own any mutual funds that will have capital gains distributions?

No, our MFs all have DRIPs, we do not withdraw from any accounts.

Ray

[kork13]

No, our MFs all have DRIPs, we do not withdraw from any accounts.

Ray

I may be mistaken, but I believe the quarterly/annual dividends are taxed immediately, not when you sell. So you would potentially have some gains from those...