Thursday, December 31, 2020

2020 Tax-Loss Harvesting (Part 3)

Part 3 of my article on harvesting tax losses covers three more recent sells. Two of these were closing trades, while the other involved trimming a position split across two different accounts. 

I'm unsure if I'll be reinvesting in any of these stocks once the blackout period required by the IRS wash-sale rule expires. These are struggling stocks with strong headwinds and, besides, I already own similar stocks in my portfolio that are performing better. 

Part 1 explained the ins-and-outs of tax-loss harvesting and I reported one closing trade to offset some 2020 capital gains. Part 2 covered three sells of Energy sector stocks, which realized losses totaling $8,671. In the conclusion of this article, I'll provide a summary of all the trades I executed to harvest tax losses for the 2020 tax year.

Today I'm presenting three more recent sells I executed to harvest tax losses. 

Simon Property Group, Inc (SPG)


SPG ia self-administered and self-managed real estate investment trust that is being challenged by retail headwinds and the economic impacts of the coronavirus. I first invested in SPG in September 2018, and added shares on three more occasions, each time lowering my cost basis. 

On June 29, SPG cut its dividend by 38%. My general approach to dividend cuts or suspensions is to close such positions. However, in July I argued that the COVID-19 pandemic created an extraordinary situation that forced many companies to temporarily cut or suspends their dividends. Instead of closing positions that suffered dividend cuts or suspensions, I decided to sell covered calls to replace lost dividend income. I wrote: 
"I'm willing to give these companies some leeway, at least until December when I usually consider trades for tax-loss harvesting purposes".
That time has come, and I'm parting ways with SPG to harvest tax losses. 

SPG Trade Summary


2018-09-24Bought 40 shares of SPG at $178.10 per share:$7,124.00
2018-11-30 Dividends on 40 shares at $2.00 per share: $80.00
2019-02-28 Dividends on 40 shares at $2.05 per share: $82.00
2019-05-31 Dividends on 40 shares at $2.05 per share: $82.00
2019-07-16Bought 20 shares of SPG at $162.82 per share:$3,256.40
2019-08-30 Dividends on 60 shares at $2.10 per share: $126.00
2019-10-18Bought 20 shares of SPG at $149.43 per share:$2,988.60
2019-11-29 Dividends on 80 shares at $2.10 per share: $168.00
2020-02-28Dividends on 80 shares at $2.10 per share: $168.00
2020-07-23Bought 20 shares of SPG at $61.32 per share:$1,226.40
2020-07-24 Dividends on 80 shares at $1.30 per share: $104.00
2020-10-23 Dividends on 100 shares at $1.30 per share: $130.00
2020-12-30Sold 100 shares of SPG at $85.33 per share:$8,533.00
 2021-01-22 Dividends on 100 shares at $1.30 per share: $130.00

                                                 
              

Capital Loss: $6,062.40

Dividends Received:$1,070.00

Commissions/Fees/Taxes:
$
5.20

Net Loss:
$
4,997.60

When accounting for dividends, I made a net loss of 34.2%% on my original investment — a loss of about 20.0% annualized. 

Selling 100 shares of SPG reduced DivGro's projected annual dividend income (PADI) by $520. 

Walgreens Boots Alliance, Inc (WBA) 


WBA is one of my longest holdings. I first invested in the company before its name change, buying 44 shares in December 2013. I've added shares on five more occasions, and my position of 400 shares eventually had an average cost basis of $55.71. 

WBA Trade Summary

2013-12-10Bought 44 shares of WBA at $56.72 per share:$2,495.60
2014-03-12 Dividends on 44 shares at 31.50¢ per share: $$13.86
2014-06-12 Dividends on 44 shares at 31.50¢ per share: $$13.86
2014-09-12 Dividends on 44 shares at 33.75¢ per share: $$14.85
2014-12-12 Dividends on 44 shares at 33.75¢ per share: $$14.85
2015-03-12 Dividends on 44 shares at 33.75¢ per share: $$14.85
2015-06-12 Dividends on 44 shares at 33.75¢ per share: $$14.85
2015-09-11 Dividends on 44 shares at 36.00¢ per share: $$15.84
2015-12-11 Dividends on 44 shares at 36.00¢ per share: $$15.84
2016-03-11 Dividends on 44 shares at 36.00¢ per share: $$15.84
2016-06-10 Dividends on 44 shares at 36.00¢ per share: $$15.84
2016-09-12 Dividends on 44 shares at 37.50¢ per share: $$16.50
2016-12-12 Dividends on 44 shares at 37.50¢ per share: $$16.50
2017-03-10 Dividends on 44 shares at 37.50¢ per share: $$16.50
2017-06-12 Dividends on 44 shares at 37.50¢ per share: $$16.50
2017-09-12 Dividends on 44 shares at 40.00¢ per share: $$17.60
2017-09-26Bought 36 shares of WBA at $79.00 per share:$2,844.00
2017-12-12 Dividends on 80 shares at 40.00¢ per share: $$32.00
2018-02-15Bought 20 shares of WBA at $69.38 per share:$1,387.60
2018-03-12 Dividends on 80 shares at 40.00¢ per share: $$32.00
2018-05-29Bought 100 shares of WBA at $63.09 per share:$6,308.69
2018-06-12 Dividends on 100 shares at 40.00¢ per share: $$40.00
2018-09-12 Dividends on 200 shares at 44.00¢ per share: $$88.00
2018-12-12 Dividends on 200 shares at 44.00¢ per share: $$88.00
2019-03-12 Dividends on 200 shares at 44.00¢ per share: $$88.00
2019-04-18Bought 100 shares of WBA at $55.00 per share:$5,500.00
2019-06-12 Dividends on 300 shares at 44.00¢ per share: $$132.00
2019-09-12 Dividends on 300 shares at 45.75¢ per share: $$137.25
2019-12-12 Dividends on 300 shares at 45.75¢ per share: $$137.25
2020-03-12 Dividends on 300 shares at 45.75¢ per share: $$137.25
2020-06-12 Dividends on 300 shares at 45.75¢ per share: $$137.25
2020-09-11 Dividends on 300 shares at 46.75¢ per share: $$140.25
2020-10-16Bought 100 shares of WBA at $37.50 per share:$3,750.00
2020-12-11 Dividends on 400 shares at 46.75¢ per share: $$187.00
2020-12-30Sold 400 shares of WBA at $39.44 per share:$15,776.00

                                                 
              

Capital Loss: $6.509.89

Dividends Received:$1,610.33

Commissions/Fees/Taxes:
$
9.40

Net Loss:
$
4,908.96

When accounting for dividends, I made a net loss of 22.0% on my original investment — a loss of about 8.6% annualized.

Selling 400 shares of WBA reduced DivGro's PADI by $748. 

Wells Fargo & Company (WFC) 


My first investment in WFC in 2016 returned 18.5% in about six months, which was a much more successful foray into the stock than my more recent investments!

Before this tax-loss harvesting trade, I owned 400 shares of WFC in two accounts, 200 shares in a taxable account, and 200 shares in a tax-deferred account. Since only losses recorded in taxable accounts are eligible for tax-loss harvesting, I sold the 200 shares in my taxable account on 30 December 2020:  

WFC Trade Summary


2019-11-13Bought 100 shares of WFC at $53.72 per share:$5,372.00
2020-03-02 Dividends on 100 shares at 51¢ per share: $$51.00
2020-06-01 Dividends on 100 shares at 51¢ per share: $$51.00
2020-06-25Bought 100 shares of WFC at $27.02 per share:$2,701.50
2020-09-01 Dividends on 200 shares at 10¢ per share: $$20.00
2020-12-01 Dividends on 200 shares at 10¢ per share: $$20.00
2020-12-30Sold 200 shares of WFC at $29.88 per share:$5,976.00

                                                 
              

Capital Loss: $2,097.50

Dividends Received:$142.00

Commissions/Fees/Taxes:
$
3.16

Net Loss:
$
1,958.66

When accounting for dividends, I made a net loss of 24.3% on my original investment — a loss of about 26.2% annualized.

Selling 200 shares of WFC reduced DivGro's PADI by $80. 

Here's a trade summary of transactions and dividends related to my remaining 200 shares:


2019-05-22Bought 54 shares of WFC at $46.12 per share:$2,490.48
2019-07-16Bought 46 shares of WFC at $45.75 per share:$2,104.27
2019-09-03 Dividends on 100 shares at 51¢ per share: $$51.00
2019-12-02 Dividends on 100 shares at 51¢ per share: $$51.00
2020-03-02 Dividends on 100 shares at 51¢ per share: $$51.00
2020-06-01 Dividends on 100 shares at 51¢ per share: $$51.00
2020-06-25Bought 100 shares of WFC at $26.64 per share:$2,664.00
2020-09-01 Dividends on 200 shares at 10¢ per share: $$20.00
2020-12-01 Dividends on 200 shares at 10¢ per share: $$20.00

                                                 
              

Unrealized Loss on 200 shares @ $29.92 per share: $1,274.75

Dividends Received:$244.00

Commissions/Fees/Taxes:
$
0.00

Net Unrealized Loss:
$
1,030.75

The 200 WFC shares I retained have a cost basis of $36.29 per share. I'm not really interested in restoring my prior WFC position, so I'll just hold onto these shares until the stock recovers. 

Conclusion


This three-part article presented seven recent sells to harvest tax-losses.

Closing or trimming positions for a loss is not a pleasant affair, but I'm offsetting about $22,028 in capital gains earned in 2020 with these trades:

Closed GILD (sold 200 shares) for a loss of:$2,724.69
Trimmed CVX by 56 shares for a loss of:$1,867.60
Closed PSX (sold 200 shares) for a loss of:$3,030.00
Closed XOM (sold 200 shares) for a loss of:$6,245.68
Closed SPG (sold 100 shares) for a loss of:$6,062.40
Closed WBA (sold 400 shares)  for a loss of:$6.509.89
Trimmed WFC by 200 shares for a loss of:$2,097.50

                                                 
              

Total Capital Losses: $22,027.87

Note that theses losses exclude dividends. 

It is unlikely that I'll reopen positions in PSX, XOM, SPG, and WBA, and I'm not looking to increase my WFC position either. On the other hand, I am hoping to reopen a position in GILD and increase my CVX position. To do so, I'll need to wait until after the wash-sale restriction period ends. 

GILD and CVX have not declared their next dividends yet, but here are estimated ex-dividend dates:
  • GILD: 12 March 2021 
  • CVX: 12 February 2021
The wash-sale restriction period will end on 31 January 2021, so I have ample time to replace the shares I sold and do so without missing a dividend payment!

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