Ask Tim: Tax-Loss Harvesting and K-1 Extensions

March Madness is truly getting me through this winter. Or is it spring right now? Who knows. In Chicago, we’ve experienced a sunny 70 degrees, freezing temps with snow, and everything in between in the last week alone. It’s been meteorological chaos… and I’m just over it.

Anyway…

This week, we’re tackling two classics: a med-school trader who finally learned what tax-loss harvesting can do, and a business owner mom who wants to know whether an extension is a strategic move or just a prettier form of panic.

Grab a coffee, grab a highlighter, and let us keep Uncle Sam from turning your April into a rodeo.

I just learned about tax-loss harvesting. Can it still help me after a rough 2025 trade?

Dear Tim,

I am 28, single, and in medical school down in Atlanta. I trade a little on the side as a hobby, and y’all, I finally heard somebody explain tax-loss harvesting in plain English. In 2025 I bought Trade Desk, figured I was being clever, then sold it later that year after it kept sliding. Now I am trying to figure out whether that loss can actually do something useful for me at tax time.

- Trying To Turn A Bruise Into A Lesson

Dear Trying To Turn A Bruise Into A Lesson,

Yes, that loss may still earn its keep. Tax-loss harvesting simply means using a realized investment loss to offset realized investment gains, and if losses run larger than gains, up to $3,000 can generally reduce ordinary income for the year, with the rest carried forward. In plain English: a bad trade may still soften your tax bill.

The details matter, of course. Your sale date matters. Any gains from other trades matter. A repurchase too close to the sale can matter a lot, because the wash-sale rules can push that loss into a later period rather than letting you use it right away.

Here is the simple version. Say you bought 100 shares of Trade Desk at $84 and sold them later at $52. That creates a $3,200 capital loss. If you also booked a $1,000 gain elsewhere, the loss wipes out that gain and leaves $2,200. That remaining $2,200 can generally help on your return too, assuming the wash-sale rule stayed out of the picture.

Here is how I would think about it this week. Pull your 2025 1099-B and line up each purchase and sale. Check the 30 days before and after that losing sale to see whether you bought Trade Desk again, or used options that could create a similar issue. Y’all do not need a Wall Street command center for this part. A clean trade list and a little patience usually get the job done.

One thing people miss: harvesting a loss is helpful, yet it does not magically make a bad trade a good investment decision. The tax benefit is the bandage, rather than the cure. Another easy miss comes later, when unused losses carry forward and quietly help in future years. For a future physician with rising income and growing investments, that carryforward can become a valuable little sidekick.

Bottom line, a rough 2025 trade may still produce a useful tax result. The key question is whether you realized the loss cleanly and dodged the wash-sale rule.

Should I file an extension for my return and the K-1 side of things too?

Dear Tim,

I am a single mother of four in Arkansas, and after years of grinding, I am finally making real money. I own a few small businesses, I do my taxes myself, and a friend told me I should probably file an extension for me and the K-1 side too.

Could you explain why an extension helps?

I want a smart system here, because rushing through business income, deadlines, and forms feels like a great way to create my own migraine.

- Trying To Keep The Wheels On

Dear Trying To Keep The Wheels On,

Congratulations on the recent growth and success! Although I’m not a CPA, we do serve many business owners who share in this annual dilemma and coordinate with their tax professionals.

An extension can be a very smart move, especially for a growing business owner wearing sixteen hats before lunch. The key driver is entity structure. Your personal return follows one path, while a partnership or S corporation return follows another, and the K-1 usually starts at the business-return level before it flows onto your personal return.

That means the business extension and the personal extension are related, yet they are separate decisions. If one of your businesses files as an S corporation or partnership, that entity may need its own extension. Then your personal return may need an extension too if you are waiting for final K-1 numbers or still cleaning up bookkeeping.

A simple example helps. Say one business issues you a K-1 showing $120,000 of pass-through income. Say your personal return looks like it will owe around $18,000 after estimated payments and withholding. Filing the extension can give you breathing room for paperwork, yet the payment estimate still deserves attention by the regular April deadline. In many cases, the extension buys time to file accurately, while the tax payment still deserves a timely check.

Here’s a fun exercise that may help you organize your thoughts around this decision. First, list every business and write down how each one is taxed: sole proprietorship, partnership, or S corporation. Then figure out which entities produce a K-1. After that, estimate your federal tax bill using last year as a starting point and this year’s income as the adjustment lever. From there, file the extension forms that fit each return and send an adequate payment estimate with them.

One thing people miss: an extension is a planning tool, rather than a permission slip for six extra months of chaos. The real win comes from using that extra runway to reconcile accounts, review payroll, clean up owner draws, and tie the books together while the details are still fresh. September and October feel much calmer when the summer gets used wisely.

Bottom line, an extension can be exactly the right move for a busy business owner. Just make sure each return gets the right treatment, and make sure the payment estimate is grounded in reality rather than wishful thinking and good vibes.

From one busy parent to another, it’s worth vetting qualified tax professionals to take over this endeavor. As you continue to grow, this is a high-risk/low-reward responsibility to retain ownership of—especially as complexities continue to grow within your financial picture.

Matching a trusted CPA with a holistic wealth manager can yield significant tax savings and efficiencies across both your personal and business finances year over year, not to mention the burden that’s lifted off.