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But not everyone is familiar with this tax-saving strategy.
Essentially, harvesting tax losses involves realizing capital losses by selling losing positions.
However, there are caveats to this strategy that can diminish its effectiveness for your tax bill.
Here arethe things youll want to watch outfor according to tax professionals.
If you violate this rule, the IRS will disallow your investment loss.
If you sell one steel stock and replace it with another, the IRS might question your trade.
Its usually best toconsult a tax expertif you tread in this bang out of gray area.
This is why many experts recommend that you never sell a stock on a cost basis for tax reasons.
This is particularly true if youre making sales across different asset classes.
Caitlyn Moorheadcontributed to the reporting for this article.
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