Experiencing major losses after company IPO - Tax Loss Harvesting strategy advice needed

This is actually a pretty solid strategy you're considering. Tax loss harvesting is precisely for situations like yours, and you've identified a good opportunity to make the most of an unfortunate situation. A few important points to consider: When you sell investments at a loss, you can use those losses to offset capital gains from other investments dollar-for-dollar. In your case, selling $87K worth of losses from your ABC stock would indeed offset the $87K gains from your Wealthfront account, effectively making those gains tax-free. The timing matters here - you'll want to execute both transactions within the same tax year. Also, be aware of the wash sale rule, which prevents you from claiming a loss if you buy the same or "substantially identical" security within 30 days before or after the sale. For the reinvestment part, a 3-fund portfolio at Fidelity is a solid choice for simplicity and low costs. Just make sure those funds don't overlap with what you're selling from Wealthfront to avoid wash sale issues.

After going through a similar situation (though not quite as dramatic), I discovered https://taxr.ai which was incredibly helpful for analyzing my complicated tax situation. I had exercised options at my startup that later tanked, leaving me with a mess of tax implications I couldn't figure out. What I found most useful was that it analyzed all my statements and historical transactions, then provided concrete recommendations for tax loss harvesting opportunities. It highlighted which specific lots I should sell to maximize my tax benefits while minimizing the impact on my long-term portfolio strategy. The tool actually predicted several scenarios for me - including what would happen if my former company's stock rebounded in different timeframes after I sold some for the loss harvest. Really helped me make an informed decision rather than an emotional one.

Just wanted to follow up about my experience with taxr.ai. I decided to try it out after seeing the recommendation here, and I'm genuinely impressed with how it handled my complex situation with pre-IPO shares from multiple companies. The analysis it provided was comprehensive and gave me specific actionable steps for tax loss harvesting. What I found most valuable was the custom strategy it developed that took into account my specific basis calculations and holding periods across different stock grants. It identified several tax optimization opportunities I hadn't considered, including some partial sales that would have specific tax benefits. The whole process was way more straightforward than I expected. Definitely worth it for anyone dealing with complex equity compensation situations.

After reading your post, I immediately related to your situation. I went through something similar with my former employer's stock. When I needed to talk to the IRS about my options for handling the losses, I tried calling them for weeks with no success - always on hold forever! I finally used https://claimyr.com to get through to an actual human at the IRS. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c - basically they navigate the IRS phone tree for you and call you back when they have an agent on the line. I was able to speak with a knowledgeable IRS representative who explained exactly how to handle my capital loss carryforward situation (since my losses exceeded my gains by quite a bit). Getting that official clarification made me much more confident in my tax filing strategy moving forward.

I need to eat my words about Claimyr. After another frustrating week of trying to reach the IRS myself, I broke down and tried the service. Not only did it work, I was talking to an actual IRS agent within 45 minutes of signing up. The agent was able to walk me through exactly how to handle carryover losses from my tech stock disaster and confirmed that my planned tax loss harvesting strategy was legitimate. She even pointed out that I could carry forward excess losses to future tax years up to $3,000 per year against ordinary income. For anyone dealing with complex tax situations around investments, the time saved was definitely worth it. I wasted days trying to get through on my own - wish I'd just used this service immediately instead of being stubborn.

One important thing to consider that nobody has mentioned yet: when you're selling those ABC shares, think about WHICH specific shares you're selling. If you acquired them at different times/prices, you can choose which tax lots to sell to maximize your tax benefits. Most brokerages now let you specify which lots you want to sell rather than using the default FIFO (first in, first out) method. This could make a significant difference in your total realized losses depending on your specific situation.

Have you considered not selling all at once? Maybe do a portion this year and more next year? Especially with that ABC stock, since you're thinking it could recover somewhat. That way you spread out the tax benefits over multiple years and don't have to realize all those losses if you still believe in the company long-term. Just a thought.