Details of Tax-Loss Swaps

As Director/Investments of The CR Wealth Management Group of Stifel, David Stone works closely with ultra-high net worth and high net worth clients. David and his colleagues collaborate with an experienced tax and estate attorney, as many of the group’s clients have complex tax needs.

To serve the needs of clients with complex tax situations, David draws on his knowledge of tax-loss swapping. This technique can serve as an option when rates have increased and caused the value of a bond to drop below its base cost. By selling the bond at a loss, the investor can fund the capital gains tax due upon the sale of an asset.

David understands the many intricacies involved in a tax-loss swap, including the wash sale rule, which forbids the recognition of a loss if the investor purchases a substantially identical product within a 30-day period prior to or after the sale.

He must also determine whether the relevant gains and losses will occur within or after 12 months. Gains or losses experienced on an asset held for 12 months or more are classified as long term, while all others fall under the category of short term. A short-term gain will offset a short-term loss and vice versa, and same category gains and losses must offset one another before the other category comes into play.

Stifel does not provide tax advice. You should consult with your tax advisor regarding your particular situation.

Stifel, Nicolaus & Company, Incorporated | Member SIPC & NYSE

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