[James]

I have been investing in crypto for many years and last few weeks has been rough. I am planning to hold it for few months/ years and see how it’s going to play out.

It’s less than 5 percent of my networth.

I heard cryptos are great for tax loss harvesting with no wash-sale issues. I was thinking about doing some TLH with crypto.

This is what I was thinking about doing.

Let say I have 3 ETH with $500 total loss- I will sell all and 3 and but it back within few mins. Any issues with that?

I also have BTC with significant gains to I was thinking about selling part of BTC to match the TLH so I will get a step up in basis for BTC.

I already have 10k worth TLH in my brokerage account to offset ordinary income for this year and next few years.
Any thoughts?

Thanks in advance.

[Scott]

You cannot sell at a loss and repurchase a substantially similar security within minutes. That is a wash sale and the loss will be disallowed.

If you had a gain you could sell it at a gain them immediately buy it back.

Keep in mind the look back for wash sales
Is 30 days before and after the sale

With the tax loss.

[Paula]

Do not sell to buy. Just buy more at the dip. Plan to hold crypto forever because only God knows if crypto will someday be our only form of currency.

[Johnathan]

If you’ve been investing in crypto for many years then I’m shocked to hear that the last few weeks have felt rough.

Cryptos gone through much large & longer corrections than this multiple times prior.

[Tony]

If it’s less than 5% of portfolio, why not just leave it be?

Crypto is so volatile, this seems like a waste of time to tinker with it every time the market goes up and down.

[Dave]

While crypto is *technically* not subject to the 30-day wash sale rule, this has been an area of legislative scrutiny in the past, so caveat venditor.

Also, it may also run afoul of the “economic substance” doctrine — if you have frequent transactions like this that are strictly for the purpose of tax harvesting, then deductibility may be impacted.

At the end of the day, tax returns are pretty much on the honor system, and the odds of you getting audited are decreasing rapidly due to gutting of IRS staff.

[Wilson]

I did this last couple of years a few times when BTC dropped and then rebought pretty much right away.

I’m planning to claim the losses based on the current rules around crypto assets.

[Author]

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