Long term vs short term gains carryover to next year

[tester74]

I am planning my tax situation for 2025 and have the following question:

I have Long term gains of about $103,000 in Stocks and about $60,000 in short term gains. In order to reduce my taxes to be paid in 2025, I plan to tax harvest my losses upto $75,000, so net at the end of 2024 will be

$103,000 LT gains and $15,000 ST losses. With this strategy, will I pay Long term tax for $88,000 in 2025?

Next year if I make ST gains of $45,000, would I pay ST gains on 45,000 or would I be able to recapture any of the 15,000 LT capital gains that were adjusted to the ST losses? I am assuming the answer is no, but wanted to confirm. 

Thanks,

[NCperson]

@tester74 let's parse this and clarify terms 

<< I have Long term gains of about $103,000 in Stocks and about $60,000 in short term gains.>>

I think you mean these are UNREALIZED long term gains and short terms gains.  you have not sold these positions, right? 

<< In order to reduce my taxes to be paid in 2025, I plan to tax harvest my losses up to $75,000, so net at the end of 2024 will be $103,000 LT gains and $15,000 ST losses. >>

<< $103,000 LT gains and $15,000 ST losses. With this strategy, will I pay Long term tax for $88,000 in 2025?

Next year if I make ST gains of $45,000, would I pay ST gains on 45,000 or would I be able to recapture any of the 15,000 LT capital gains>> 

did you mean to call this ST term in one place and LT in another place? are these the same dollars or different dollars? it's hard to follow. 

you also have $75,000 of unrealized loses, right.  If you sell these positions, the long term losses will be netted against your long term gains and the short term losses will be netted against the short terms gains.  It appears you are assuming all the losses can be netted against the short term gains.  Not true (unless all the losses are short term). 

let's stop there and ask you to reconfirm the terminology.  It's not clear whether these are unrealized positions in 2024 or you are selling all these positions, so they are really realized gains and losses.  Once you clarify your remarks we can answer your question.

[tester74]

Thanks for quick response and sorry for the confusion in the original post

I have realized gains of $103,000 (Long term) and $60,000 (short term) this year but want to reduce my tax bill. I have unrealized short term losses of about $75,000 which I was planning to sell by the end of 2024. With this strategy, I will have $103,000 LT gains and $15,000 ST losses at end of 2024, so I am assuming I will pay long term capital gains tax for the $88,000 in Apr 2025. Is this correct?

Now 2 scenarios which I am preparing for 2025 - If I make say $75,000 Short term gains in 2025 and no long term gains, I will have to pay short term gains on 75,000 in 2026. Is it worth offsetting long term gains with short term losses?

Scenario 1:

For 2024: $103,000 LT gains and $15,000 ST losses = $88,000 LT gains, tax at 15% = $13,200

For 2025, $75,000 ST gains, tax at 35% = $26250

Total tax: $39,450

Scenario 2: If I keep ST losses as 0 and move the $15,000 ST losses to 2025

For 2024: $103,000 LT gains, tax at 15% = $15450

For 2025, $60,000 ST gains, tax at 35% = $21000

Total tax: $36450

So, offsetting long term gains with short term losses is not tax beneficial, is this correct understanding?

Thanks for your patience on this.

[NCperson]

@tester74 - okay - much clearer.

Scenario 1 - that is correct. the only thing I would look into - as your didn't provide the additional detail is that if your income exceeds $200,000 (SINGLE), you will pay the 3.8% NIIT tax on the part of your unearned income that exceeds $200,000.  Further since you indicate the 35% ordinary income tax bracket, how high is your income and does it push the capital gains into the 20% capital gains tax bracket?   

and you are correct offsetting short term losses with long term gains in not tax efficient. 

but best to sell based on your market view of the investment and let the tax consequences fall where they may.  if you believe there are "losers" just sell them now and move on.  if you don't consume all your losses, they are carried over in any event; they are not lost.  what you are assuming is no change in the market value of your losses.  If the price changes, then your assumptions about the tax consequences change.   Taxes are the tail to the dog in my view.