Avoiding the Wash Sale Trap and Mastering Tax-Loss Harvesting the Right Way
A 2025 Field Manual for Entrepreneurs Who Refuse to Leave Money on the Table
Why Smart Founders Obsess Over After-Tax Returns
Even the hottest A-round or the slickest SaaS multiple means little if Wall Street quietly clips your gains on April 15. Tax-loss harvesting (TLH) is the legal judo move that turns temporary price pain into permanent tax alpha, but only when you dodge the wash-sale minefield that disallows the deduction.
What’s at stake in 2025?
Billions in disallowed losses show up every year in Box 1g of Form 1099-B, erasing write-offs that would otherwise offset capital gains. (IRS)
A peer-reviewed study finds ~1.08 percentage points of annual “tax alpha” for portfolios that harvest losses systematically. (Nerd's Eye View | Kitces.com)
Washington has crypto in its sights—Treasury’s FY 2025 “Green Book” proposes extending the wash-sale rules to digital assets starting January 1, 2026. (U.S. Department of the Treasury)
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1. The 61-Day Gauntlet: Wash-Sale Basics for 2025
The IRS disallows any capital loss if you buy a “substantially identical” security 30 days before or after you sell the loser (a 61-day window). That rule also sweeps in your spouse’s and your IRAs’ trades. Rev. Rul. 2008-5 confirms that an IRA repurchase nukes the deduction and gives you no basis step-up inside the IRA. (IRS)