Elite Features

Tax-Loss Auto-Harvest

8 min read

What it is

Scans your tax lots for unrealized losses, then proposes wash-sale-safe replacement assets so you can book the loss for tax purposes WITHOUT going to cash. Each opportunity = (losing lot to sell, suggested replacement to buy, estimated loss in USD, estimated tax savings at your marginal rate). Preview a plan + check for wash-sale conflicts before executing on a connected exchange. Two tabs: Opportunities (current) and History (what you've already harvested).

How to think about it

Tax-loss harvesting is the cheapest legal tax reduction technique most retail traders never use. The IRS lets you offset realized gains with realized losses — but the wash-sale rule says you can't repurchase the SAME asset within 30 days. This tool finds your losing lots, suggests a correlated-but-not-identical replacement (e.g., sell ETH → buy WETH or stETH), books the loss for tax purposes, and keeps you in the market. NOT tax advice — talk to a CPA before relying on the estimated savings.

Step-by-step

  1. Set your tax rate + minimum loss threshold

    Marginal tax rate = your combined federal + state rate (typically 22-37% federal + your state). Min harvest loss = the smallest USD loss worth harvesting — gas fees and slippage eat small harvests, so $25-50 is a reasonable floor. The estimated savings KPI updates live as you change these.

  2. Read the 3 KPI cards

    Harvestable lots = number of lots currently below your threshold. Total unrealized loss = sum of those losses in USD. Estimated tax savings = total loss × your marginal rate. Estimate is approximate; actual savings depend on your final tax-year situation.

  3. Browse the Opportunities list

    Each row = one harvest opportunity. Shows: the asset to sell (e.g., ETH from your Coinbase account), the lot acquisition date + cost basis, current price + unrealized loss, and one or more suggested replacement assets that are economically similar but legally distinct.

  4. Pick a replacement asset

    Examples: sell ETH → buy WETH, stETH, or LDO (correlated). Sell BTC → buy WBTC, cbBTC, or BTC.B. Sell SOL → buy jitoSOL or mSOL. Replacements are chosen to maintain economic exposure WITHOUT violating wash-sale (which requires "substantially identical" assets). The tool errs conservative — when in doubt, it does not suggest.

  5. Click Harvest + preview the plan

    Opens the Plan modal. Pick the exchange to execute on (must be connected). Click Preview. Backend computes: the exact sell + buy orders, expected fees, the IRS lot disposal, and runs a wash-sale conflict check against your 30-day-prior trade history. If a conflict exists, the modal shows red — wash-sale rule says the loss would be disallowed, so reconsider.

  6. Execute (after preview)

    If preview is clean, click Execute. Backend places the sell + buy orders on your chosen exchange. The lot is marked harvested in your cost-basis ledger. The new replacement asset becomes a new lot with today's cost basis. The History tab updates with the harvested record.

  7. Acknowledge wash-sale if you choose to execute anyway

    If the wash-sale check flagged a conflict but you understand the implication (loss will be disallowed for THIS tax year but added to the replacement asset's cost basis), tick the acknowledgment checkbox to proceed. This is intentional friction — the platform makes you actively opt in to the wash-sale consequence.

  8. Track in History

    History tab shows every harvest you have executed with timestamps, lots disposed, replacements acquired, and computed tax savings. Useful for your CPA at tax time. Export via Tax Report page for full 8949 line items.

Tips & pitfalls

  • Wash-sale rule applies to "substantially identical" assets. The IRS has not issued formal guidance for crypto, but the conservative interpretation: same token = wash-sale; different token even if correlated = not wash-sale. This tool assumes the conservative interpretation. Talk to a CPA before relying on edge cases.
  • Estimated savings is rate × loss. Real savings depend on your final tax situation: total realized gains, total realized losses, capital loss carryover, ordinary income offset (up to $3000/year), etc. The KPI is a planning number, not a refund prediction.
  • Best time to harvest is late November / early December — before year-end. Harvest losses now to offset gains you already booked earlier in the year. Crypto markets often dip in late Q4 which creates the opportunities.
  • NOT tax advice. Tax-loss harvesting reduces your tax bill THIS year by booking a loss, but you give up the original asset's future upside. If you sell ETH at -$5000 and buy WETH, the WETH cost basis is the new (lower) price — when you eventually sell WETH at profit, the capital gain is computed from that lower basis.
  • The 30-day wash-sale window applies BOTH WAYS: 30 days before AND 30 days after the harvest sale. If you bought ETH 20 days ago AND you harvest ETH today, your earlier ETH purchase triggers a wash sale on the harvested loss. The preflight check looks at both windows.
  • Min harvest threshold of $25-50 is the practical floor for most users. Below that, fees + slippage eat too much of the savings. For Pro traders with low-fee exchange tiers, $10 thresholds become viable.
  • Harvested replacement becomes a NEW lot with today's cost basis. Plan accordingly — if your replacement is volatile, you may have a fresh unrealized gain or loss within days. Use Tax Report page to see your post-harvest lot ledger.
  • Tax-Loss Harvest works best when paired with Tax Report (for the lot ledger) and Tax Strategy (for the lifetime FIFO/LIFO/HIFO comparison). Both are in the Intelligence menu.