Imagine this scenario: you have a large unrealized capital loss in a security and no capital gains this year (or in the previous three years) to apply the loss against – your spouse, however, does have a large capital gain and could use the loss to reduce his or her tax bill.
In a nutshell: it may be possible to transfer the loss to your spouse by taking advantage of the superficial loss rule. You would transfer the security to your spouse in exchange for a cash payment for the fair market value. Your spouse would then wait at least 30 days before selling the security. The capital loss would accrue to your spouse and not to you.
One way this could really matter: if your spouse has a large realized capital gain and no available unrealized losses to offset it. This strategy could reduce your family tax burden significantly depending on the size of the loss being transferred.
Be sure to discuss this strategy with your investment advisor to make sure it is appropriate in your circumstances and that it is implemented properly.
How to accomplish such a transfer, and an explanation of the 30-day wait before selling the security, can be found in our article on Transferring Capital Losses to your Spouse.