Zach Palmer Quoted in Barron's on Power of Tax Loss Harvesting

Recent market declines have provided an opportunity for us to tax loss harvest for clients. Barron's recently highlighted how tax loss harvesting works. Capital losses can be used to offset taxable capital gains from winning positions—or even to write off up to $3,000 from your personal income taxes if you have no gains to offset. And unused loss write-offs don’t expire at year end. They can be banked and used to offset gains in future years.

Beware the Wash Sale Rules When Tax Loss Harvesting

To avoid the wash sale rule the security purchased after a loss sale can't be "substantially identical" to the one sold. However, the IRS has never formally defined what “substantially identical” means with regard to substitutions. According to Zach Palmer of Ark Royal Wealth Management in Charlotte, N.C., the firm has recently been selling his clients’ shares of Dimensional International Core Equity Market (ticker: DFAI) and replacing them with Dimensional International Core Equity 2 (ticker: DFIC) or Avantis International Equity (ticker: AVDE). Portfolio “composition is extremely similar for all funds,” he notes, and their performance is “highly correlated.”

Click here to read the full article in Barron's.