PIMCO Education

Refresher on Tax Loss Harvesting

John Nersesian, head of Advisor Education, provides a short primer on tax loss harvesting, a strategy that can help advisors alleviate their clients’ tax burden and improve their balance sheets. Interested in additional advisor and investor resources?

Visit pimco.com/taxlossharvesting

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Text on screen: PIMCO EDUCATION –TITLE – Refresher on Tax Loss Harvesting with John Nersesian

Text on screen: PIMCO provides services only to qualified institutions and investors. This is not an offer to any person in any jurisdiction where unlawful or unauthorized.

Text on screen: John Nersesian, Head of Advisor Education

John Nersesian: Hi. I'm John Nersesian, head of Advisor Education at PIMCO.

Today we're going to be talking about a specific tactical opportunity around tax loss harvesting.

Graphic Title: Capital gains/losses recognition

Description: This graphic consists of two boxes, describing how capital gains and losses are calculated. One box is titled “Short-term transactions,” while the other is titled “Long-term transactions.” Each box contains a particular equation that results in a net position, over short-term and long-term transaction periods, respectively. The short term transaction box displays the following text beneath the title: Total short-term gains minus total short-term losses = net short-term position. Underneath the long-term transaction box, is text displaying: total long-term gains minus total long-term losses = net long-term position.

Let's start with a quick refresher on this capital gain and loss harvesting methodology, to take advantage of those opportunities when they exist in the marketplace.

Of course, we start first with short-term gains against short-term losses. We net those two together to come up with a net short-term position.

We then move the methodology over to the long-term position, those assets held in excess of 12 months, and we net out gains against losses there as well.

Graphic Title: Capital gains/losses recognition

Description: This graphic consists of two boxes, describing how capital gains and losses are calculated. One box is titled “Short-term transactions,” while the other is titled “Long-term transactions.” Each box contains a particular equation that results in a net position, over short-term and long-term transaction periods, respectively. The short term transaction box displays the following text beneath the title: Total short-term gains minus total short-term losses = net short-term position. Underneath the long-term transaction box, is text displaying: total long-term gains minus total long-term losses = net long-term position. A small table lists the possible outcomes of the equations: Both gains = each taxed at applicable tax rate; Both loss = deduct up to $3000 currently (short-term first), excess carries forward indefinitely; One gain/one loss = combine the two (net ST or LT, CG or CL), net gain taxed according to applicable rate, net loss deductible up to $3000 currently, excess carried forward indefinitely.  It’s noted that short term gains are taxed at ordinary income rates plus 3.8% net investment income tax, and long term gains are taxed at capital gains rate plus 3.8% net investment income tax.

Finally, we pull the two together, and we net out our net short-term position against our net long-term position utilizing that net number in a variety of different ways.

If we have a gain at the end of the day, that gain is going to be taxed based on the relative holding period. If, however, that netting methodology produces a loss, our clients of course can use losses, dollar for dollar, against realized gains. Anything above and beyond can be used up to $3,000 a year against ordinary income. Anything above that amount gets carried forward indefinitely.

Text on screen: To learn more visit pimco.com/YearEndPlanning or speak with your Account Manager

Text on screen: PIMCO

Disclosure


IMPORTANT NOTICE:
Please note that this video contains the opinions of the manager as of the date recorded, and may not have been updated to reflect real time market developments. All opinions are subject to change without notice.

All investments contain risk and may lose value.

PIMCO does not provide legal or tax advice. Please consult your tax and/or legal counsel for specific tax or legal questions and concerns. The discussion herein is general in nature and is provided for informational purposes only. There is no guarantee as to its accuracy or completeness.  Any tax statements contained herein are not intended or written to be used, and cannot be relied upon or used for the purpose of avoiding penalties imposed by the Internal Revenue Service or state and local tax authorities. Individuals should consult their own legal and tax counsel as to matters discussed herein and before entering into any estate planning, trust, investment, retirement, or insurance arrangement. This video is intended for investment professionals, but has been made generally available for informational purposes only.

The views and strategies described may not be appropriate for all investors. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, accounting, legal or tax advice. You should consult your tax or legal advisor regarding such matters. Please contact your account manager for further information.

PIMCO as a general matter provides services to qualified institutions, financial intermediaries and institutional investors. Individual investors should contact their own financial professional to determine the most appropriate investment options for their financial situation. This material contains the opinions of the manager and such opinions are subject to change without notice. This material has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission. PIMCO is a trademark of Allianz Asset Management of America L.P. in the United States and throughout the world. ©2022, PIMCO.

Pacific Investment Management Company LLC, 650 Newport Center Drive, Newport Beach, CA 92660, 800-387-4626.

CMR2023-0830-3086203

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