tax-loss selling

(redirected from Tax Loss Selling)

Tax-Loss Selling

The act or practice of selling stock or other securities at a loss in order to offset gains from other investment or income. In the United States, one is able to reduce one's taxable income by the amount one has lost in investing. Therefore, it is common to sell securities that have declined anyway at the end of the year and thereby reduce one's tax liability.

tax-loss selling

The sale of securities that have declined in value in order to realize losses that may be used to reduce taxable income. Tax-loss selling occurs near the end of a calendar year so that the loss can be used in that tax year to offset ordinary income or gains on other security transactions. Thus, tax-loss selling occurs mainly among stock that has declined in price. Compare tax selling.
Mentioned in ?
References in periodicals archive ?
The implications of our finding is that VaR is a possible proxy for tax loss selling that is priced because of potential tax benefits.
Ask potential managers if they are willing to work with you to do tax loss selling in individual client accounts.
Tax loss selling also has been significant this year, the first year since the 1990 bear market that investors have had significant losses they could use for income tax purposes by simply selling their losers.
It is believed that tax loss selling by mutual funds was, therefore, vigorous and often at fire-sale prices as funds managers raced to minimize realized gains before closing the books in October.
Wachtel (1942), Branch (1977), Roll (1981), and Keim (1983) suggest the tax loss selling hypothesis which asserts that each December individual investors sell common stocks declining in value during the year to offset other realized taxable gains.
The flipping of the calendar year brings tax loss selling, "Santa Claus" rallies, and the "January Effect.
1) A popular theory explains this by tax loss selling.
In the December recommendation, The Acker Letter stated , "Alpha Pro Tech's stock price appears to be more reflective of recent market uneasiness and tax loss selling than of the Company's recent bottom line performance and anticipated growth.
The way the group should evolve would be most making lows coincident with the stock market (final margin selling) and even the heavy tax loss selling due in November-early December won't take them back to October lows.
In a recent edition of their morning stock market report (dated 10/23/98), the company provided helpful information to its members and trial members on how tax loss selling strategies may help save you money.
Levi also noted that "although it is our policy not to comment on our stock price, the company has observed a significant decrease in the company's stock price during the past few weeks and does not know of any reasons for this decline other than concerns over the retail business in general or possible tax loss selling of the stock prior to year end.
Management is being advised to time the NASDAQ SmallCap listing after year-end, thus avoiding tax loss selling, and begin trading in early 1996.