Can I deduct a capital loss on a stock that I could have sold, but did not sell during the year because of "Constructive Receipt"?

[whappy]

My mutual fund included Capital Gains without my selling anything during the year because of Constructive Receipt.

[TomYoung · Accepted solution]

See, but you did have "constructive receipt."  You could have taken that distribution in cash.  You elected not to.

Tom Young

[whappy]

Tom, you did not answer the question I asked.   Still seems unfair to pay tax on a unrealized 2018 capital gain that has now lost value and be unable to deduct an actual loss in value (from the constructive receipt 2018 high).

[TomYoung]

You're wrong in you logic.  If you'd taken the money, but then decided to buy more shares you'd be in the exact same spot.  That money would not in your bank account, and the stock you bought with that money declined in value.

You "pre-programmed" that situation, but that's not really relevant.  You could have stretched out your hand and said "gimme the money!"   Instead you held up your hand and said "Keep it!  Gimme some more stock in my name."

But that ability to stretch out your hand and have the cash dropped into it is the very concept of "constructive receipt."  

Maybe you made the wrong choice - at least short term - but either way, it was always YOUR choice.

[Zbucklyo]

I'm not exactly sure what you are getting at, but the capital gain must be reported.

[whappy]

Seems unfair to pay tax on a unrealized 2018 capital gain that has now lost value and be unable to deduct an actual loss in value (from the constructive receipt 2018 high).

[Zbucklyo]

See @TomYoung answer.  He is correct.  The gain was realized.

[TomYoung]

"Seems unfair to pay tax on a unrealized 2018 capital gain that has now lost value and be unable to deduct an actual loss in value (from the constructive receipt 2018 high)."

Sell the stock; there's your realization.  

[fanfare]

Watch out for wash sales.
Note: some funds reinvest gains in March.