As fund managers, insurance companies, and individual investors re-balance their portfolio at the end of the year, they often try to “harvest” built-in losses to offset capital gains. This implicates what tax lawyers call “the trade date rule.” With a few exceptions, the current income tax system has annual accounting periods, loss offsets, and a realization requirement. This means that gain or loss from a position is generally not taken into account until the position is closed, and capital gains and losses taken into account within a given tax year may offset each other in determining net capital gain or loss for the year. The trade date rule is the rule that determines whether gain or loss from closing a securities position is taken into account on the trade date, or on the settlement date. The Alert “Trade Date Rule,” recently drafted by John Kaufmann, of counsel in Greenberg Traurig’s New York office, explores how this affects financial services firms and individual investors who enter into closing transactions near the end of the year.