Tax Loss Harvesting

Tax loss harvesting is a tax optimization method whereby investors sell their poor performing stocks and investments — i.e., they have gone down in price since they were purchased.  Each year, the IRS allows investors to offset unlimited amount of capital losses against capital gains earned during the year. In addition, up to $3,000 worth of capital losses can be deducted from ordinary income.

However, you can immediately repurchase the same or substantially identical investment within 30 days, or your capital loss will be disallowed as per the wash sale rule.