Bitcoin vs S&P 500: Investment Recommendation Before December 31
- Here's a breakdown of the key facts from the provided text, serving as a "hard stop" for comprehension:
- * Crypto Underperformance: Bitcoin is down 5% year-to-date, while the S&P 500 is up nearly 18%.
Self-Check: Key Facts from the Article
Here’s a breakdown of the key facts from the provided text, serving as a “hard stop” for comprehension:
* Crypto Underperformance: Bitcoin is down 5% year-to-date, while the S&P 500 is up nearly 18%.
* Tax Loss Harvesting Incentive: This performance difference creates an incentive for investors holding both crypto and stocks to sell crypto at a loss before December 31st to offset capital gains from stock profits.
* Tax Loss Harvesting Explained: Selling an asset at a loss allows investors to reduce their tax burden. losses first offset gains dollar-for-dollar, with up to $3,000 deductible from ordinary income annually, and further losses carried forward.
* crypto vs. Stocks – Wash Sale Rule: The IRS “wash sale” rule (requiring a 31-day wait before repurchasing a sold stock) does not apply to cryptocurrency bought and sold on the spot market (classified as property, not securities). This allows for immediate repurchase. Though, it DOES apply to crypto ETFs.
* Timing is Important: The recent drop in Bitcoin price, particularly for those who bought near its peak, maximizes the potential for tax loss harvesting.
* Expert Quotes & Affiliations:
* Tom Geoghegan: Certified Financial planner, Founder of Beacon Hill Private Wealth (Summit, New Jersey). Highlights crypto tax loss harvesting as part of a broader tax strategy.
* Robert Persichitte: Certified Public Accountant & Financial Planner, Delagify Financial (outside Denver). Emphasizes the ability to promptly repurchase Bitcoin after selling for tax loss purposes.
* Will Cong: Professor of Finance, Samuel Curtis Johnson School of Management at Cornell University. Notes the importance of the timing of the Bitcoin price drop.