Banking a 15k realized loss is a good deal if you are in a high enough tax bracket. You can offset up to 3k from ordinary income every year even if you don't have any realized gains to offset.

If you re-buy the same things 30 seconds after selling, that is a "wash sale". Please look up the wash sale rules. The bottom line is that if you sell (at a loss) and re-buy the "substantially identical" positions within 30 days, you can't deduct your loss. Rather, the loss gets added to the cost basis of your new position (and you can deduct that loss when you eventually sell the new position).

Now, let's pretend that you're not buying "substantially identical" positions, but are instead buying something that gives you exposure to the same thing (e.g. you're selling one crypto index fund and buying another crypto index fund). You are going to be able to deduct $3000 on your taxes this year and have $12000 to offset potential gains next year. To me, that doesn't at all feel like it would be worth $800 in fees.

The $800 in fees are probably going to basically equal what you're saving in taxes by getting to deduct the $3000. So it's not like you're walking away with any extra cash today. I just can't see that being worthwhile.

(And again, if you sell stuff at a loss and buy that identical position back, then you can't deduct it anyway.)

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That's a pretty big chunk of fees to pay - over 5%. It would make sense if you are likely to reduce your tax rate by more than that, which is possible but not guaranteed, depending on what your marginal rate is this year and what the cap gains rate is the year you eventually sell.

> ...that is a "wash sale". Please look up the wash sale rules.

I don't think it applies to crypto at the moment?

But my question is, can we still swing tax loss harvesting at all for 2022? I think today was the deadline at 4pm eastern when the markets closed. But does that apply to crypto? I'd think getting it done tomorrow would be fine but only find sources with conflicting guidance.

Crypto are not yet considered securities by IRS. Wash sale rule only applies to securities.

Wash sales don't apply to crypto or NFTs.

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Wash sales don't apply to crypto currently.

My understanding is that wash sales don't apply to crypto as they are not currently considered securities.

Besides that, everything else you said is exactly what I was wondering.

I sort of make back the fees in April, but after that I'm not sure what I'm saving by doing this.

I'm not sure if I'm thinking of this properly: Let's say I pay the lowest rate of 15%.

If I make 15k next year, I would pay 2300 in taxes. So potentially, if I make 15k in profit, I'd avoid paying those taxes? Or is this incorrect?

>US Crypto Wash Sale Rule
>
>The IRS does have a wash sale rule. The US wash sale rule occurs when an individual investor sells or trades an asset at a loss and buys back a "substantially identical" asset within 30 days. If an investor does this - they cannot claim a capital loss.However, the US wash sale rule currently only applies to assets that are classified as securities - like stocks, bonds and other financial instruments. Cryptocurrency isn’t classified as this by the IRS, it’s classified as property.So right now, the IRS wash sale rule doesn’t apply to crypto. This said - the wash sale rule will apply to crypto related securities like stocks in exchanges.Before you rejoice - this is very likely to change in the near future. US congress are currently reviewing the tax treatment of crypto to tighten up loopholes like these.

However, you should keep the following in mind:

>The Economic Substance Doctrine
>
>The economic substance doctrine is a common law rule that unwinds actions taken by a taxpayer despite the taxpayer meeting all of the requirements of the IRC if the taxpayer cannot show the transaction has economic substance or a business purpose. The common law doctrine was codified in 2010 with the addition of IRC section 7701(o). However, the Code provision makes clear that the determination of whether the economic substance doctrine is relevant to a transaction shall be determined based on the judicial history of the common law rule and as if IRC section 7701(o) was never enacted.
>
>There are two prongs to an economic substance doctrine analysis. The first prong inquires as to whether the transaction being entered into changes in a meaningful way the taxpayer’s economic position (commonly referred to as the objective prong of the doctrine). The second prong inquires whether the taxpayer had a subjective non-tax purpose for entering into the transaction (commonly referred to as the subjective prong of the doctrine). At its core, the doctrine is trying to ensure a taxpayer entered into a transaction for a reason other than solely reducing tax liability and that its effect on the taxpayer includes something other than the mere tax effect.
>
>There is currently a Circuit split between the DC and Sixth Circuit and the Third and Fifth Circuit on when the economic substance doctrine should apply. The DC and Sixth Circuit limit the use of the economic substance doctrine to situations where the tax provisions in question are open to debate or the text of the tax provisions in question reference economic substance. The Third and Fifth Circuit have applied the doctrine broadly allowing a court to unwind transactions even when a taxpayer followed the clear and unambiguous guidelines laid out in the Code provisions so long as the individual falls short on either of the two prongs of the doctrine.
>
>IRC section 1211, the Code provision that allows for the harvesting of a tax loss, is short, clear, and does not reference the need for economic substance. Furthermore, our research did not find a single case applying the economic substance doctrine to IRC section 1211 (undoubtedly this is partially due to the wash sale rule). In almost all of the cases in which the economic substance doctrine has been applied elaborate schemes were devised by the individuals and corporations involved and the amount of money involved was substantial. Therefore, we believe it is highly unlikely that the IRS would apply the doctrine to an individual who harvests a tax loss from the crypto market correction. However, it is easy to envision scenarios where a nefarious taxpayer created an elaborate scheme to benefit from IRC section 1211. In that case, we would not be surprised to see the IRS take action under the economic substance doctrine.
>
>Conclusion
>
>An individual is clearly allowed to harvest a tax loss based on IRC section 1211. How the individual can redeploy the harvested losses back into the ecosystem is far from clear. Based on a strict interpretation of the Code, an individual could redeploy the harvested loss directly back into the same crypto asset. However, an individual invoking this strategy could have his/her loss unwound by the economic substance doctrine. If an individual wishes to be safe while harvesting his/her crypto loss, the individual could follow the guidance of the well-established wash sale rule. In between those two scenarios is a murky area of the tax law. The more nefarious and elaborate the scheme to harvest the tax loss, the more likely the IRS is to unwind the transaction.

​

US Crypto Wash Sale Rule - https://koinly.io/blog/crypto-tax-loss-harvesting/
The Economic Substance Doctrine - https://cryptoustaxattorneys.com/redeploying-crypto-harvested-losses-the-wash-sale-rules-and-the-economic-substance-doctrine/

The above is never financial or taxation advice.
Always do your own research!

Discount Code in Bio.

been accumulating Luna earlier this year, and got my bag close to 300 prior to crashing, avg buy in the mid-60's. Then after the crash, bought the dip and got 1000000+ Luna for like $60.

I assume a capital loss needs to be realized for cases like this? I went ahead and sold 300 Luna just incase (at 99.999....% loss lol)

It does indeed need to be realized.