Unusually stern disclaimer: I am not a tax or accounting expert. I am not qualified to provide tax advice. In this article, I am telling you how I am thinking about my own tax situation and exposures. You should consult a tax and accounting professional for advice if you have year-end questions.
There is a difference between your investment gains/losses and your taxable gains/losses. The first is a reflection of how much your portfolio gained or lost value during the year. The second is solely a function of your realized gains and losses. You could easily have made money this year and have capital losses if you sold positions like $AUID. You could easily have lost money in your account this year, and have capital gains if you sold positions like $SCPH, $TLN, or $LVS. Your realized gains will rarely match your portfolio gains.
Last year, I let you know that I had big capital gains related to positions like $SWAV and $TLN. To offset those, I covered some of the market short and realized losses there. To replace that short exposure, I bought puts on the SPY and QQQ equity indexes. That way, I didn’t have to pay taxes AND kept my exposure where I wanted it.
If I had capital losses this year or a capital loss carryforward from losses in prior years, one thing I could do would be to sell $GBTC and buy $IBIT. I have big gains in $GBTC because we bought that years ago when Bitcoin was in the $15k – $20k range and it was trading at a discount to net asset value (meaning we were buying Bitcoin exposure at a discount to the market price). I don’t like holding $GBTC because their fee schedule is about 10x the industry average leaving me paying lots of unwelcome fees each year. By selling $GBTC, I could realize gains which then offset prior losses meaning no tax hit on those gains. Then, I can buy $IBIT leaving me with the same exposure while saving thousands of dollars in fees each year.
If you are facing these kinds of decisions, you are welcome to reach out and I’ll do all I can to help. While I can not provide tax advice, what I can do is help you figure out if there is a way for you to substitute securities leaving you with identical or near-identical portfolio exposure should you decide to try to lock in gains or losses for year-end tax purposes. There’s not a lot of time before year-end, but I’m here for you. If you need help with portfolio exposures, please reach out ASAP so I have time to provide a thoughtful answer.
Happy New Year to all of you in advance. Wishing all of us a safe end to 2025 and a prosperous 2026. Thank you for being part of Deep Knowledge Investing.
IR@DeepKnowledgeInvesting.com
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