Overall it has been a positive year for investors, despite some of the recent volatility due to falling oil prices. As the year closes, investors should consider reviewing their portfolios to identify any possible tax loss selling opportunities. Some investors may have capital gain distributions from some of their mutual funds or other gains they posted earlier in the year. Before taking action it is important to remember some of the rules.
1) Be aware of the wash sale rule. If you sell a security for a loss you may not repurchase it back for 30 days including an option or any other derivative of that same security. http://www.irs.gov/pub/irs-pdf/p550.pdf
2) You can offset capital gains with losses up to the amount of your gains but you can only use losses to offset ordinary income up to $3,000 per tax year.
Also keep in mind any charitable gifting as the year comes to a close and always consult with your tax advisor before taking action!
Happy Holidays!