Executive Summary

Tax-loss harvesting – i.e., selling investments at a loss to capture a tax deduction while re-investing the proceeds to maintain market exposure – is a popular strategy for financial advisors to increase their clients’ after-tax investment returns. For many, however, tax-loss harvesting remains somewhat more of an art than a science: Because the value of harvesting losses is so dependent on an individual’s own tax situation, there is no single strategy that can be implemented across an entire, diverse client base. And to complicate things further, when it is decided to go ahead with tax-loss harvesting, there are numerous considerations involved to ensure the strategy is carried out correctly and avoids running afoul of the IRS’s wash sale rules (which could disallow losses and negate the value of the strategy altogether).

But because tax-loss harvesting can be so valuable in certain situations, having a framework for

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