Investors used tax-loss harvesting to offset $90,000 in losses from the 2022 S&P 500 decline, deferring capital-gains tax payments indefinitely.
A tax-loss harvesting strategy allowed investors to book $90,000 in losses during the 2022 market downturn without exiting positions. By selling underwater funds and immediately purchasing similar assets, they realized losses to offset future capital gains and reduce taxable income by up to $3,000 annually.
The S&P 500 fell nearly 20% in 2022, creating opportunities for tax-loss harvesting. Investors avoided the wash-sale rule by swapping into non-identical funds, preserving market exposure while deferring tax liabilities. Unused losses carry forward indefinitely under IRS rules.
This approach is legal and embedded in tax code, applicable to taxable brokerage accounts. It enables long-term tax deferral while maintaining investment positions.