Every December, the market gets quieter. Trading desks thin out. The pros disappear to wherever pros disappear — the Hamptons, the Maldives, Aspen, or some other place with either perfect beaches or perfect snow. Headlines get louder, holiday plans take over, and most investors mentally clock out.
But beneath the surface, something far more important is happening.
This is the moment when the tax year is quietly closing in the background, whether you’re paying attention or not. Gains and losses are about to be locked in. Opportunities are about to expire. And the final two weeks of the year become one of the most powerful — and most overlooked — windows for shaping your financial outcome for the next twelve months.
This is the home stretch when you can harvest gains or losses, rebalance with intention, and make strategic moves that simply aren’t available once the calendar flips.
And the best part? You don’t need to overhaul your portfolio. You just need to understand how to use the rules to your advantage.
Why These Last Two Weeks Matter More Than You Think
The IRS doesn’t care about your long‑term plan, your market outlook, or your conviction in a company’s future. It cares about one thing: what you realized before December 31.
That’s why this short window is so valuable. You can still:
Lock in gains at today’s tax rate
Realize losses to offset those gains
Reset cost basis on positions you plan to hold for years
Rebalance your portfolio while the tax impact is still in your control
Once January 1 arrives, the slate resets. Any gains or losses you didn’t realize are locked into next year’s tax bill.
This is why professional investors treat mid‑December as a strategic window, not a scramble.
Yes — You Might Even Sell Positions You Love
This surprises people, but it’s one of the most sophisticated moves you can make.
Even if you believe in a position long‑term, selling it now can be smart if:
You want to capture a loss to offset gains elsewhere
You want to capture a gain at a lower tax rate this year
You want to reset your cost basis to reduce future taxable gains
You want to rebalance without creating a tax surprise later
Selling a high‑conviction position doesn’t mean abandoning it. It means using the tax code to your advantage — and then stepping right back into similar exposure through a lateral move.
The Lateral Move: Stay Invested Without Triggering a Wash Sale
The wash‑sale rule says you can’t sell something at a loss and buy it back within 30 days. If you do, the IRS disallows the loss.
But here’s the opportunity: You can still stay fully invested by shifting into something similar but not substantially identical.
This is where lateral moves shine.
Examples of safe (non-wash sale triggering) lateral moves may include:
A different company in the same industry
A broad sector ETF
A thematic ETF that captures the same trend
A mutual fund with similar exposure
A factor‑based ETF (growth, value, momentum) that overlaps but isn’t identical
This lets you:
Harvest the loss
Maintain exposure to the theme you believe in
Avoid sitting in cash for 30 days
Re‑enter your original position later if you choose
It’s one of the most elegant ways to stay invested while still optimizing your tax outcome.
What About Crypto? Strategic Harvesting Even When You’re Bullish Long‑Term
Crypto investors often find themselves in a unique position at year‑end. You may be extremely bullish on the long‑term future of digital assets — yet still be sitting on short‑term losses after a volatile year. That combination creates an opportunity: you can harvest those losses without abandoning your long‑term conviction.
But here’s the nuance: Crypto is still a developing area in tax law, and the IRS has not issued detailed guidance on what counts as “substantially identical” in the digital asset world. That means you’ll want to check with your CPA, but there are reasonable, IRS‑friendly moves that many investors use to stay invested while still capturing losses.
The key is to avoid buying back the same asset or something the IRS could argue is economically indistinguishable. Instead, you rotate into something that maintains exposure to the theme — without mirroring the exact structure or issuer.
✅ Examples of Crypto Lateral Moves That May Avoid the “Substantially Identical” Issue
Here are some conceptual examples of how investors maintain exposure while harvesting losses:
1. Moving from a trust structure to an ETF structure
A trust and an ETF can behave very differently — one may trade at premiums or discounts, while the other tracks spot prices more tightly. Because they’re different vehicles with different mechanics, many tax professionals view this as a reasonable lateral move.
2. Rotating from a single‑asset vehicle into a diversified crypto fund
If you sell a product tied to one digital asset and buy a fund that holds a basket of crypto‑related assets, the exposure is similar but not identical. This keeps you in the ecosystem without triggering wash‑sale concerns.
3. Switching from a spot‑based product to an equity‑based crypto fund
Some funds hold crypto directly, while others hold companies that build the crypto economy. These are clearly not identical, yet they allow you to stay aligned with the broader theme.
4. Moving between different issuers with different structures
Two products may track the same underlying asset but use different custodians, pricing mechanisms, or regulatory structures. These differences can matter when determining whether something is “substantially identical.”
✅ Why This Matters for Crypto Investors
Crypto tends to move fast — sometimes violently — and sitting out for 30 days can mean missing a major rally. Lateral moves let you:
Capture the loss
Stay invested in the theme
Avoid the 30‑day wash‑sale window
Re‑enter your original position later if you choose
It’s a way to turn volatility into a tax advantage without compromising your long‑term thesis.
Angles Most Investors Miss
1. Harvesting gains can be just as strategic as harvesting losses
If you expect to be in a higher tax bracket next year, realizing gains now can save you money long‑term.
2. Cost‑basis resets are a hidden superpower
Selling and rotating into a similar investment can clean up old, messy cost basis lots and give you more flexibility in future years.
3. December is often the best time to rebalance
If your portfolio drifted out of alignment, trimming winners and adding to laggards is far more tax‑efficient right now.
4. Mutual funds distribute capital gains in December
Buying before the distribution can saddle you with someone else’s tax bill. Timing matters.
5. Charitable giving pairs beautifully with harvesting
Donating appreciated shares lets you avoid capital gains entirely while taking a deduction for the full market value.
A Quick Note on Tax Advice
We’re not tax attorneys (althought we'll work closely with yours, with your permission) and this isn’t tax advice. But we can help you think strategically, understand the mechanics, and — most importantly — identify the closest matches for your high‑conviction exposures so you can make smart lateral moves without triggering wash‑sale issues.
✅ Ready to take action before the window closes?
If you’d like help reviewing your positions, exploring lateral‑move options to run past your tax pro, or building a year‑end strategy tailored to your situation, we’re here to support you.
Reach out through our contact page: Contact Maendel Wealth
Or, for time‑sensitive questions, email James Maendel directly: jmaendel@e-vestech.com
This is the moment when thoughtful planning can translate directly into real financial impact. Let’s make the most of it!