Selling an investment below its cost can create a capital loss that may offset gains under tax rules. The trade also changes what the investor owns.
Start with the investment case
A tax loss does not make a replacement strategy suitable or preserve the same risk exposure automatically.
The wash-sale window matters
Buying a substantially identical security within the restricted period can defer the loss. Purchases in another account may matter too.
Records outlive the trade
Cost basis, dates, and adjustments should be retained because the tax effect can carry into future years.
Sources
- Internal Revenue Service, Publication 550, Capital Gains and Losses.