Quote:
Originally Posted by Camelback
The stock market didn't just ended the year way up, it began way up in record territory, then lost 40%, then rocketed back to new record highs. Trading volume and financial transactions exploded, all of which are taxable events.
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They're only taxable events if you let them be, take gains but fail to take losses and so on.
As I said, I totally readjusted my own portfolio in March/April of 2020 which means my own "trading volume" was much higher than usual, but most of the trades generated losses, not gains. Those losses obliterated the gains that came later. As a result, I paid less taxes in 2020 than I would have in a normal year. Any stock investor who didn't do something similar probably missed an opportunity. I did the same thing in 1998, 2008 and in 2018 by the way, all other years in which the market tanked and revived fairly quickly.
Market gyrations are opportunity events but not necessarily events that generate taxes for the government. The old saying is, "Cut your losses but let your winners run." If you do that, you do not have taxable gains until you ultimately do recognize the gains.