Claiming you love tax season is like saying you enjoy root canals, traffic jams, stubbing your toe, and hangovers -- and especially all at once.

You’re either a sadist, a masochist, a psychopath, or something worse than all of them: an accountant whose dating profile says he has a “passion for the U.S. tax code.”

I don’t know about you…

But I procrastinate doing things I hate.

Which is why it’s December 15…

And I’m only now thinking about my tax loss harvesting strategy.

The good news? It’s not too late.

If you’re also looking to do some last-minute finagling to save some money, we’ve got you covered.

First things first: What is tax loss harvesting?

Here’s a little history…

The History of the Method

Tax loss harvesting is a strategy where you sell investments at a loss to reduce your tax burden.

And it’s nothing new.

The U.S. income tax, established in 1913 after the ratification of the 16th Amendment, didn't distinguish much between earned income and capital gains -- at first.

Over the years, as the tax code “evolved” (if that’s what you want to call it), the distinction between these types of income became more pronounced, and the idea of offsetting capital gains with capital losses became more strategically important for investors.

One pivotal moment was the stock market crash of 1929 and the ensuing Great Depression.

Investors who incurred significant losses in the market crash could use those losses to offset other taxable income (though the rules at the time were different from today's).

AKA, “tax loss harvesting.”

This period marked a significant point in financial history, where the understanding and management of investment losses (and their tax implications) became crucial for many investors.

What To Do With Your Crypto

Starting with the obvious:

If you clock in gains on December 31, 2023, at 11:59PM, you’re going to have to pay in April.

Meaning, unloading investments right now where you’re up makes little sense, unless there’s an absolute need to liquidate now.

Now, what about those not-so-stellar performers in your portfolio? Here's a strategy that only currently works for crypto: sell them, then immediately rebuy.

You can’t do this with stocks. If you sell, you have to wait 30 days to buy back in.

BUT the IRS hasn't yet clamped down on wash sales for digital assets. This loophole might not be around forever, so keep that in mind.

Imagine you're sitting on Bitcoin with a $42k basis, but it's trading at $31k on the last day of 2023.

Selling on December 31 locks in a $15k loss, which you can immediately turn around by repurchasing, resetting your basis at a lower level.

And there's more:

If you’re holding worthless NFTs, there are services that’ll buy your NFT for less than a penny, allowing you to count it as a loss.

(Interested? Check out unsellablenfts.com)

What To Do With Your Stocks

Alright, so you can't play the same immediate buy-back game with stocks as you can with crypto, thanks to the IRS's wash-sale rule.

But don't worry; there are still some savvy moves you can make with your stocks before the year wraps up.

First up, take a good look at your portfolio.

Identify stocks that are underperforming – the ones that make you wince every time you check your portfolio. These are your candidates for tax loss harvesting.

Selling these stocks can help offset gains you've made elsewhere, reducing your overall tax bill.

Just remember, once you sell, you can't buy back the same stock for 30 days.

What to do after selling those losers? This could be a great opportunity to diversify.

If your portfolio is heavy on tech stocks, for instance, consider reinvesting in other sectors (like, as James recommends for 2024, cybersecurity). This not only helps in managing risk but also prepares your portfolio for different market conditions.

Finally, there's a trick called a "tax-swap."

Say you have a losing stock, but you still believe in its long-term potential. After selling it (and logging that tax-loss), you can buy a similar stock or ETF in the same industry. This way, you stay invested in the sector, adhere to the wash-sale rule, and still reap the benefits of tax loss harvesting.

(Restrictions apply to the tax-swap rule, so make sure you’re staying above board.)

Remember, the key here is timing.

And sometimes the best thing to do is NOTHING. So don’t feel bad if these tricks don’t apply to your situation.

But if they do…

With the year-end fast approaching, these moves need to be made soon to count for this tax year.

And of course, while we're all about smart financial moves, consulting with a tax professional is always a good idea to ensure your actions align with current tax laws and your personal financial situation.

There you have it – a few ways to make your stocks work for you as we say goodbye to 2023.

Whether it's crypto or stocks, playing it smart can save you a bundle come tax time.

Happy harvesting!

And in the words of Steve Jobs…

One Last Thing

As you probably know, we had our 7 Predictions Summit on Wednesday of this week.

And it was a hit!

But don’t take it from us. Here are some of the comments that breezed past during the show.

If you haven’t yet, you can watch the FULL replay right here at this link.

BUT that’s not all.

After you watch the replay, be sure to go to 221spots.com to check out how you can secure the “Master Key” to our business.

Spots are limited and running out fast!