tax selling

Tax selling

Selling of securities to realize losses that will offset capital gains and reduce tax liability. See: Wash sale.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Tax Selling

1. 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.

2. The act or practice of selling stock or other securities at a gain in order to reduce an expected higher tax liability. Tax selling at a gain is common in December when an investor expects his/her income to be higher the following year. Thus, one pays the higher income tax on the gains this year rather than pay the higher still gains next year.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

tax selling

The sale of securities to establish gains or losses for income-tax purposes. Significant tax selling often occurs in December, especially following a bear market, as investors seek losses to offset previous gains or other income. An investor may engage in tax selling to establish gains when he or she expects to be paying a higher marginal tax rate the following year. Compare tax-loss selling.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.
References in periodicals archive ?
Attempt has been made to link the January effect with tax selling in December and the ensuing rebound in January (Branch, 1977; Jones, Pearce, & Wilson, 1987).
Robert Claridge, Wirral Campaign against the Bedroom Tax Selling city assets I READ in the property section of the ECHO (October 27) that the council has put the Municipal Building up for sale.
Also, ATI is a long-selling process and the opportunity for loss selling diminishes as the tax selling weeds out the initially underperforming stocks.
The New Year brought some of the usual tax selling. High ferrous prices obviated any need to sell other products.
To the extent that tax selling is documented in November, this paper presents evidence supporting an explanation of stock seasonalities based on selling pressure.
Bolster, Lindsey, and Mitrusi (1987) document tax selling in December 1986 and a weakened January effect in 1987.
For many investors the date marks the opening of tax selling season.
Clark, who acts as a financial advisor for several investment clubs in Maryland and Virginia, says, "Tax selling is a strategy for more sophisticated clubs that have done exceptionally well; they have several realized gains in their portfolio." It's time to give a stock the once-over only if it has gained 30% from your initial investment.
This provides a strong incentive for an investor to delay realizing any losses, refraining from any year-end tax selling he would otherwise do.
Investment broker Walt Clark notes that the period after Thanksgiving is called tax selling season, because many investment clubs tend to sell stocks that are at a loss in order to off set some of the gains made through out the year and lessen their tax liability." After 31 days, the club can buy back any stock it thinks is poised to perform better, he adds.