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Reduce Taxes Through Tax-Loss Swapping


David Stone joined the CR Wealth Management Group of Stifel as Director/Investments in 2016. At Stifel, David Stone and his team serve the interests of their clients by utilizing strategies such as tax swapping.

A strategic form of tax planning, tax-loss swapping involves the sale of investments that have experienced losses. In their place, investors purchase stocks from firms in sectors with equivalent foundations.

When completing these transactions, investors must keep the IRS’s wash-sale rule in mind. This rule prohibits an investor from recognizing a loss on the sale of a security if he or she purchases a “substantially identical” security within 30 days before or after the sale. Since the IRS’ definition of what constitutes a “substantially identical” security is somewhat vague, you should consult your tax advisor before making a purchase.

When employed effectively, the tax-swap strategy may allow investors to bolster the diversity of their portfolio. Moreover, it serves as an alternative to simply holding on to low-performing stocks. By taking advantage of losses, investors have the opportunity to pave the way for future profits.

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

Article provided by David Stone, Director/Investments with Stifel, Nicolaus & Company, Incorporated, Member SIPC & NYSE, who can be contacted in the New York, New York office at (212) 328-1000.

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