|Taxable Accounts||Tax-Deferred Accounts|
Tax efficiency, low turnover, passive investing
Shelters lower tax efficiency, higher turnover, active management
Another avenue is to harvest losses held less than one year and gains held for more than one year. Using a highest-in, first-out (HIFO) method when selling stock can help ensure you identify shares purchased at the highest price, reducing taxable capital gains.
Be sure not to run afoul of the “wash-sale rule,” which would disallow the loss. A wash sale occurs when a security is sold at a loss and the investor buys a “substantially identical” security 30 days prior to or after the sale. Also, when rebalancing, it’s important to earmark proceeds into the correct asset allocation.
Remember that transactions for tax year 2018 must occur by December 31.
If you’d like to learn more about how a tax-aware strategy might fit into your portfolio, or if you want broader guidance as you evaluate your portfolio and refresh your financial plan for the new year, our experts are here to help. Please feel free to reach out to us and schedule a personal consultation.
The information, views, opinions, and positions expressed by the author(s), presenter(s) and/or presented in the article are those of the author or individual who made the statement and do not necessarily reflect the policies, views, opinions, and positions of Hancock Whitney Bank. Hancock Whitney Bank makes no representations as to the accuracy, completeness, timeliness, suitability, or validity of any information presented. This information is general in nature and is provided for educational purposes only. Information provided and statements made should not be relied on or interpreted as accounting, financial planning, investment, legal, or tax advice. Hancock Whitney Bank encourages you to consult a professional for advice applicable to your specific situation.
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