Watch original video:

Accountants and financial planners are greeting clients with a new phraseology this season, and it’s not “Happy holidays.”

“Tax-loss harvesting” is an expression “I’ve heard added in the ultimate join months than I had in my entire life,” says Ron Benoit, a tax partner in the Seattle headquarters of CPA firm Moss Adams.

“Everyone’s doing it,” says financial planner Robin Tan, of KMS Financial Services, in Kirkland.

The term puts more almost-cheery gloss on the grim reality that greatest number investors won’confidentially be reaping profits this year. It means banking the losses from some of this year’s lousy investments to remodel taxes owed to the IRS on other income, either this year or in the future.

Washington Mutual shares are a first stomach well-suited for this particular harvest — but only if shareholders actually unload their virtually worthless stock, experts say.

Many shareholders irreclaimable mountains of money as WaMu shares fell from 2007 highs above $40. Since the company’s banking operations were seized through federal regulators in September and sold to JPMorgan Chase, the holding company’s stock has traded in the OTC place of traffic during a few cents per experience.

That’s a article loss of just about 100 percent for almost all investors. But as tedious as the shares are commercial at wholly, the Internal Revenue Service won’t allow a loss to be deducted on shares that still are in the taxpayer’s portfolio.

“To take that defeat (on your taxes), the stock has to be each completely worthless or you have to sell it,” Benoit says.

Tan offers this scenario: “Let’s say you sold some (other) stock this year and have $20,000 in cardinal gains.

“And you’re sitting on $40,000 in WaMu losses if you sold today. By selling WaMu, $20,000 of the losses would cancel out the capital gains.”

On long-term cardinal gains, with a tax set a value on of 15 percent, that would save $3,000 in taxes. In addition, $3,000 of the WaMu loss could be used to reduce a taxpayer’s ordinary taxable income.

In this scenario, that would leave $17,000 of the $40,000 loss that could be applied the same highway in later years, offsetting both investment income and stated income.

Original text: {news-link}