Estimating the impact of tax-loss harvesting
When you sell a stock that you own, you realize gains, or losses. Short-term gains, realized within a year of buying and selling an asset, are taxed at your maximum (or marginal) tax rate. Long term-gains, realized after a year, are taxed at a lower, preferential rate. The first thing to consider is losses. Losses can be cancelled against gains, reducing your tax liability. Losses can also be carried over to the next tax year and be redeemed against those gains. When you own a bunch of the same type of stock, bought at different times and prices, you can choose which shares to sell. This allows you to decide whether you realize short- or long-term gains (or losses). This is known as lot matching (or order matching). You want to sell the shares that lost value before selling the ones that gained value. Booking losses reduces your taxes; booking gains increases them. If faced with a choice between booking short term and long term losses, I'd go with the former. Since net short-term gains are taxed at a higher rate, I'd want to minimize the short-term tax liability before moving on to long-term tax liability. If my remaining shares had gains, I'd sell the ones purchased earliest since long-term gains are taxed at a lower rate, and delaying the booking of gains converts short-term gains into long-term ones. If there's a formula for this, I'd say it's  (profit - loss) x (tax bracket) = tax paid
It makes sense for a lot of people - it's basically weather insurance. It's useful for farmers (bad weather ruining a harvest), airlines (abnormally high amount of snowstorms increasing cost of delayed flights), hotels (rain making people visit less), ski resorts (not enough snow) and other businesses that can be negatively impacted by extreme weather variations.  If they systematically slightly overpay for this protection the speculator can make money on net helping these businesses reduce the volatility of their cashflows which is important because they need to pay their overhead costs every year.  Edit: The derivatives themselves also allows the people selling weather insurance to hedge their exposure on the market. It looks like it has to deal with an expiration of rights as a taxable event. I found this link via google, which states that  Not only does the PSEC shareholder have a TAXABLE EVENT, but he has   TWO taxable events. The net effect of these two taxable events has   DIFFERENT CONSEQUENCES for DIFFERENT SHAREHOLDERS depending upon their   peculiar TAX SITUATIONS. The CORRECT STATEMENT of the tax treatment of unexercised PYLDR rights   is in the N-2 on page 32, which reads in relevant part as follows: “…, if you receive a Subscription Right from PSEC and do not sell or   exercise that right before it expires, you should generally expect to   have (1) taxable dividend income equal to the fair market value (if   any) of the Subscription Right on the date of its distribution by PSEC   to the extent of PSEC’s current and accumulated earnings and profits   and (2) a capital loss upon the expiration of such right in an amount   equal to your adjusted tax basis (if any) in such right (which should   generally equal the fair market value (if any) of the Subscription   Right on the date of its distribution by PSEC).” Please note, for quarterly “estimated taxes” purposes, that the   DIVIDEND taxable events occur “ON THE DATE OF ITS DISTRIBUTION BY PSEC   (my emphasis),” while the CAPITAL LOSS occurs “UPON EXPIRATION OF SUCH   RIGHT” (my emphasis). They do NOT occur on 31 December 2015 or some   other date. However, to my knowledge, neither of the taxable events he mentions would be taxed by 4/15. If you are worried about it, I would recommend seeing a tax professional. Otherwise I'd wait to see the tax forms sent by your brokerage. Whether you're self-employed or not, knowing exactly how much tax you will pay is not always an easy task.  Various actions you can take (e.g., charitable donations, IRA contributions, selling stocks) may increase or reduce your tax liability. One tool I've found useful for estimating federal taxes is the Excel 1040 spreadsheet.  This is a spreadsheet version of the income tax return form.  It is not official and is not created by the IRS, but is maintained as a labor of love by a private individual.  In practice, however, it is pretty much an accurate implementation of the tax calculation algorithms encoded in the tax forms and instructions. The nice thing about it is that it's a spreadsheet.  You can plug numbers into various slots in the spreadsheet and see how they affect your federal tax liability.  (You may also owe state taxes depending on what state you live in.)  Of course, the estimates you get by doing this are only (at most) as accurate as your estimates of the various numbers you plug in.  Still, I think it's a free and useful way to get a ballpark estimate of your tax liability based on numbers that you can more easily estimate (e.g., how much money you expect to earn). Yes, rebalancing with new money avoids capital gains taxes and loads (although if you're financially literate enough to be thinking about rebalancing techniques, I'm surprised to hear that you're invested in funds with loads). On the other hand, if it's taking you years to rebalance, then: (a) you are not rebalancing anywhere near frequently enough.  Rebalancing should be something you do every 6 months or 1 year, such that it would take only a few weeks or maybe a month of new investment to get back in balance. (b) you will be out-of-balance for quite a long time, while the whole point of the theory of rebalancing is to always be mathematically prepared for swings in the market.  Any time spent out of balance represents that much more risk that an unexpected market move can seriously hurt your portfolio. You should weigh the time it will take you to rebalance the long way (i.e. the risk cost of not rebalancing immediately) vs. the taxes and fees involved in rebalancing quickly.  If you had said that it would take you only a couple weeks or a month to rebalance the long way, I would say that the long way is fine.  But the prospect of spending years without a balanced portfolio seems far more costly to me than any expenses you might incur rebalancing quickly. Since it's almost the end of the calendar year, have you considered doing two quick rebalances, one this year, and another in January?  That way half of the tax consequences would happen in April, and the other half not until the next April, giving you plenty of time to scrounge up the money.  Also, even if you have no capital losses this year with which to offset some of your expected capital gains, you would have all of next year to harvest some losses against next year's half of the rebalancing gains. "I'm not an accountant, and you should probably get the advice of one to be sure about what to do.  However, if the business is a sole-proprietorship, you'd complete a Schedule C for the business, and you'd end up with a loss at the end.  If the investment you made in the business is considered to be entirely or partially ""at risk"" per the IRS definition, you'd get to claim all or part of the loss as a reduction in your income.  If the business was an LLC, then you're beyond my already limited knowledge. There may be some other considerations based on whether this was really a business vs a hobby, and whether or not you're going to try to continue with the business, or whether you've shut it down.  I'm not sure about those parts, but they'd be worth exploring with an accountant." Ah, my bad! You are refering to the study's methodology, right?  In the introduction of the study, they mentioned that several countries have repealed their wealth tax, so I got the understanding that they used those instances as exogenous events from which they could draw conclusion.  Upon reading more carefully, it does indeed seem like this study did a cross sectional study over time instead. Based upon what little is publicly known at this time, it doesn't look good for CAT, PWC or outside counsel. The economic substance they offered up sounds like *post hoc* reasoning. The tax court buying their current explanations would have to accept some exceptionally astute, long-range planning took place that accepted the initial costs exceeding the nascent parts revenue, as well as the risks of over-optimizing tax operations if the necessary revenue didn't materialize; and it doesn't seem they are yet offering any evidence to show that kind of foresight. It will be fascinating to follow, for sure. Your three options are: Options 2 and 3 are obviously identical (other than transaction costs), so if you want to keep the stock, go for option 1, otherwise, go for option 3 since you have the same effect as option 2 with no transaction costs.  The loss will likely also offset some of the other short term gains you mentioned.