This year, more than ever, has brought the unrealized tax sheet under the microscope, and at CLS we have been actively harvesting tax losses in our portfolios. If Congress doesn’t pass new legislation, short and long term capital gains taxes are set to increase, therefore we are gleaning any capital losses and gains within our portfolios. These new changes could take high income earners’ long-term capital gains rate from 15 percent to as high as 25 percent. However, it’s worth noting the old adage about tax harvesting: “Don’t let the tax tail wag the investment dog.” Tax harvesting cannot counteract our long term investment thesis. The tax savings must outweigh the potential for a turnaround in that particular security or overall explicit return consensus. As with anything tax related, it’s always best to consult the expertise of a tax professional.

Comments provided by guest writer Matt Santini, CLS Portfolio Manager