Finding underwater lots for tax loss harvesting
I find myself in need of harvesting some tax losses this year. I have never found an easy or elegant way of identifying underwater lots in taxable accounts. It can be done, but none of QWin's tools are built for this and, bottom line, I end up having to eyeball each red lot in a portfolio view. Next step would be to export to a spreadsheet and manipulate the results there.
So I went looking on this forum to see whether anyone had a good reliable method for this. The joke's on me, I found my own question asking the same thing years ago. I wonder whether anyone out there is smarter than me and has figured out a good way to accomplish this goal in QWin.
Or maybe it's time to submit an Idea to add a loss harvesting tool?
Quicken user since version 2 for DOS, now using QWin Biz & Personal Subscription (US) on Win10 Pro.
Comments
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Wouldn't the Capital Gains Estimator work for that?
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To add to my reply in your prior query:
I also like to see the gain/loss % column and might sort by that as an alternate to pure gain/loss.
Taking the $4,000 loss off of a $10,000 cost basis (-40%) may be a wiser choice than a $5,000 loss off a $50,000 cost basis (-10%).
If the programmers need to develop a better tool, I would think the Cap Gains Estimator would be the place to start rather than changes to portfolio views. But again as I noted previously, I am not proficient with the CGE.
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Sorry I just looked back at the old thread. Based on that I would say nothing has changed, and that is the answer.
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I don't know what could be easier or more straight-forward than the CGE. Clicking red lots with negative numbers until you have the desired amount is not rocket science. The hard part will be to make sure the right lots get sold on whatever platform you use for that. If you're talking about average cost mutual funds with covered and non-covered shares, then that can get tricky and has to be done on the mutual fund website.
If you believe in your holdings long-term, it's only a 30-day decision to avoid a wash sale until you buy it back, so you don't need to do a bunch of analysis. If you think a holding has run its course and you want to replace it permanently, then select those first.
The CGE works fine in manual mode for what you are looking to do.
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I agree with @markus1957 manual mode in Captial Gains Estimator seems like the way to go. Frankly on the automatic modes I don't think there really is enough information on how they are even going about that to trust the results. In the other post I was just trying to make it "work" because that is what seemed to be the goal at the time. BTW if you select a lot that gives you too much losses, you can also change the number of shares in the proposed sales section.
As for @q_lurker 's suggestion that there should be a percentage displayed, that does seem helpful and an easy thing to add, but without anyone formally suggesting it, there isn't any chance that it will happen. Personally, I almost never have the need for lose harvesting, so I have not looked into the nuisance like that. One thing that strikes me though is instead of looking for a percentage, just look for the lot that has the highest purchase price.
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As for @q_lurker's suggestion that there should be a percentage displayed,
To be clearer, I was referring to using a portfolio view for the selection process. Gain/loss % is an available column in portfolio view customization.
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You guys have me more confused than before. Gain/Loss percentage has nothing to do with this. For tax loss harvesting, one needs absolute dollar amounts. Percentages are irrelevant. How many actual dollars can I write off as a loss to counter some number of actual dollars in gains?
Quicken user since version 2 for DOS, now using QWin Biz & Personal Subscription (US) on Win10 Pro.
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Sorry for the confusion.
If I have two securities with similar total dollar losses, I may not need to or want to harvest both of them. Or in seeking to build up a total dollar amount to harvest, I might be able to choose three small losses or one larger loss. For making that determination, I find considering the how much of the original cost basis has been lost as a percentage. In my investment strategy, it is simply as data point to consider. Hope this helps.
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I never really thought a lot about it before @q_lurker brought it up, but deciding what lots to sell instead of just any that make up the loss can affect both how good your portfolio looks (mostly an illusion) and even future returns.
The "how it looks". If you sell the lots that are the most underwater your current gain/loss will look better than if you sold lots that are less underwater. This the "mostly an illusion", one.
But if you have securities that pay dividends, you are paid per share, not based on their gain. The farther underwater a security is the less amount of them you will have to sell to get the loss you want.
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P.S. of course if your intent is just wait 30 days and buy the same shares back then only the first "mostly illusion" applies.
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I think it would be fairly simple to provide a new feature "Show me a report of all underwater lots of liquid securities in my taxable accounts" with various options for subtotals (by account, long- vs. short-term holdings, etc.) That's what I'm after.
Quicken user since version 2 for DOS, now using QWin Biz & Personal Subscription (US) on Win10 Pro.
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What do you mean by 'manual' mode? I have never been able to get anything intelligible out of CGE—I try every few years and just give up after awhile.
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When you go through the steps you get to this page:
Supposedly this is to be able to take the "goals" you want, and it suggest what securities/lots to sell.
I have never seen this work "right".
If you hit Next instead of Search, you get this page where you can select the securities/lots "manually".
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