Hello AuptMan,

Not sure where you are from but I am guessing it is outside Canada. Cannot speak for other countries but most tax loss selling will occur in the month of December here as Jan 1 to Dec 31 is our financial fiscal year for taxes.

With the way that the markets have taken a beating to people this year I would not be surprised to see people selling and rebuying if only to reset their average purchase price (the price used to calculate capital gains on the sale of a stock).

In Canada we use the current purchase average to calculate this. For instance, if I buy 10000 shares at 1.00 and sell 5000 shares at 1.50, my capital gain is $2500. If I buy 15000 more shares at $3.00, my average is now $2.50 (existing 5000 * 1.00 + new 15000 * 15000 all divided by 20000).

Though we can carry forward losses into 3 future years (or apply them against the capital gains paid up to 3 prior years for a refund), sometimes it is cleaner to reset an average price near the end of a year.

This process is often referred to as tax loss selling and must take place three days prior to the last trading day of the year (typically the last possible settlement date in any given year). Because of this there are some bargains available on that day each year :)

So in Canada we do not have a capital gain until we sell. And even then, we are only taxed on 1/2 the capital gain if using a registered account, so the tax ends up to be about 20% of the profit at the end of the day (assuming a net 40% tax bracket).

M1.