• Collecting tax losses is a strategy that investors can use to reduce the total amount of capital gains taxes owed on the sale of profitable investments.

  • The strategy involves the sale of an asset or security with a net loss.
  • The investor can then use the proceeds to purchase a similar asset or security, maintaining the overall balance of the portfolio.
  • The investor must be careful not to violate the IRS rule against buying a “virtually identical” investment within 30 days.