Tax Time Is Coming. How Stocks With Losses Offset Capital Gains. – Barron’s

Taxes don’t really have a season on Wall Street—and a host of stocks that have been on the losing side will be sold from now through the end of the year to trim bills from the IRS.

It’s called tax-loss selling, or “harvesting,” and here’s how it works: A portfolio manager sells an investment at a loss to offset the gains from other assets. A stock sold for a gain is taxed, but one sold at a loss isn’t, so incurring losses is how the portfolio manager lowers the overall amount of gains—and shrinks the portfolio’s tax bill.