It’s getting close to the end of the year, which means our thoughts turn to taxes and end of year tax prep. Tax loss selling has begun, and as you can see, it has affected TAG Oil’s share price.
Tax loss selling is used to offset capital gains from other sources. But it goes against the first rule of investing: “Buy Low, Sell High.”
What the sellers are doing, is simply selling stocks or assets at a loss so that they can claim it as a loss, thereby offsetting capital gains on another asset. One benefit is that you can carry the losses forward indefinitely or you can also apply those losses back three years.
There is a hitch though: Once you sell a stock for a tax loss purpose, you cannot buy it back for 30 days, or you forfeit the right to claim the loss. So look at the big picture and good luck with your tax planning. Meanwhile, we’ll be pulling for a ever healthier oil prices and a return to a stronger share price.