[sf_rob]

Couldn't they employ tax gain harvesting for users that are interested in the short/long term capital gains differential in TLH? They don't do this, but I'm curious.

i.e. cycle long term gains after one year of ownership so that they are more likely to produce harvestable losses in the next year. Obviously this prevents the basis gains of TLH, but wouldn't it be dwarfed for users whose long-term capital gains tax rate is much lower than their short-term capital gains rate?

[zeroer]

Yea, tax gain harvesting is definitely something you can do. Though it's harder than tax loss harvesting. You have to take into account the entirety of a person's tax situation to do it, as opposed to tax loss harvesting, which only require knowledge of the account transaction history, which Betterment and Wealthfront of course have. To do tax gain harvesting you have to wait until late December when you have most of the information, and you essentially have to complete an entire tax return.

[tanderson92]

Yes, but this only works for those who are exploiting a difference between their marginal tax rate and the LTCG rate. That is, those in the 15% marginal bracket whose LTCG rate is 0%. For other investors it is preferable to pay no taxes (continue to hold the security long-term even after it qualifies for long-term tax treatment)