October 2025 Client Profile

Nicholas owns a small tech startup and has invested in various stocks through his personal investment account. Over the past year, his portfolio included shares of Company A, which he bought at $10,000, and Company B, purchased at $8,000. Recently, Company A’s stock has declined to $6,000, and Company B’s stock has dropped to $5,000. Nicholas decides to implement tax-loss harvesting to reduce his tax liability.

He sells his shares of Company A at a loss of $4,000 and his shares of Company B at a loss of $3,000. These realized losses can offset his $7,000 capital gains from other investments or, if he has no gains, he can use up to $3,000 of the losses to reduce his ordinary income, carrying the remaining losses forward to future years.

By doing this, Nicholas effectively lowers his taxable income, saving money on taxes. To maintain his portfolio’s desired asset allocation, he then re-invests the proceeds into similar stocks or funds, avoiding the wash-sale rule. This strategic move helps Nicholas optimize his tax situation while keeping his investment strategy on track.

Client Profile is based on a hypothetical situation. The solutions discussed may or may not be appropriate for you.