Tax-motivated trading by individual investors

Zoran Ivković, James Poterba, Scott Weisbenner

Research output: Contribution to journalReview articlepeer-review


We analyze stock trades made by individuals holding stock in both taxable and tax-deferred accounts. By comparing trades across these two types of accounts, we uncover a capital gains lock-in effect in taxable accounts. The lock-in effect is more pronounced for large stock transactions and for stocks held for at least 12 months. Over shorter horizons, the disposition effect outweighs the lock-in effect. Comparison of loss realizations in taxable and tax-deferred accounts yields evidence of tax-loss selling throughout the year. Effective accrual tax rates for stocks that experience substantial appreciation are substantially below the statutory tax rate on long-term gains.

Original languageEnglish (US)
Pages (from-to)1605-1630
Number of pages26
JournalAmerican Economic Review
Issue number5
StatePublished - Dec 2005

ASJC Scopus subject areas

  • Economics and Econometrics


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