Citrin Cooperman Partner and Tax Practice Leader Joe Bublé discusses tax-loss harvesting with Financial Advisor Magazine's Jeff Stimpson and the potential benefits, downfalls, and what to look out for when investing in exchange-traded funds (ETFs).
“If an investor sold one particular tech stock and invested in a tech sector ETF, those investments are not substantially identical. If an investor sold one S&P 500 index ETF and bought another S&P 500 index ETF, they would likely be considered substantially identical.”
Tax-loss harvesting in general only works in accounts where investment gains incur taxes. “The biggest drawback is that the ETF may not perform as well as the stock that was sold,” Bublé said. “In addition, make sure the tax savings outweigh the transaction costs.”
Read more at FA Online.