Cache Long/Short manages wash-sale risk at the household level, not just inside a single account.

When you provide account information to Cache, it’s transmitted to Brooklyn Investment Group (BKLN), whose system monitors trading activity and applies automated controls to reduce the likelihood of disallowed losses. Restricted or employer-related securities can be excluded, and loss-realizing trades are coordinated to avoid repurchasing substantially identical securities within the wash-sale window.

This doesn’t eliminate wash-sale risk entirely, especially when external accounts or discretionary trades are involved, but it significantly reduces accidental violations. If your outside holdings change, let us know so they can be factored in.

A wash sale occurs when a position (or substantially similar position) is bought and sold within a 61-day window: 30 days before the sale, the day of the sale, and 30 days after. The rule applies across all accounts the investor owns, including IRAs, Roth IRAs, and accounts owned by a spouse.

Yes. You can provide a list of restricted securities (due to employer policies, insider status, or personal preference) and those stocks will be excluded from trading, subject to review and approval.

From Schwab: Regular brokerage statements and annual tax forms (Form 1099-B for realized gains and losses, Form 1099-DIV and 1099-INT if applicable). These are the same forms you’d receive from any taxable brokerage account.

From Cache: In-app visibility into realized short-term and long-term losses, net tax dollars harvested, and ongoing gains and losses as they accrue. This is informational reporting, not a replacement for official tax forms.

Cache does not issue tax forms or provide tax advice. All official tax reporting comes from Schwab. You (or your tax advisor) determine how harvested losses are applied on your return.

Exiting is ideally a deliberate and tax-aware process, not instantaneous. A long/short structure uses borrowed capital and short selling to create additional gross exposure. Unwinding that exposure abruptly can trigger taxable gains that have the potential to undo years of careful tax management.

You decide when to begin. BKLN manages execution from there.

How the process works

Once you initiate the deleveraging, the system reviews your portfolio regularly, evaluating embedded gains and losses across positions. It reduces exposure only when realized gains can be paired with sufficient harvested losses to keep the net tax impact at or near zero.

Think of it as a “zero-gain” goal: net realized gains are targeted to stay at or below zero during the transition. If closing a position would push gains above that threshold, the optimizer evaluates this and attempts to ensure gains are not triggered.

Because it seeks to act only when the math works, leverage doesn’t decline linearly. It steps down in stages, which can mean quieter periods followed by more meaningful reductions. The pace depends on market conditions.

Timeline expectations

There’s no fixed timeline, but most investors should expect several years, not months. Exiting too quickly potentially reduces the tax benefit.

Some investors unwind slowly to spread taxes across multiple years. Others accelerate if outside liquidity (from an IPO, business sale, or other event) gives them flexibility to absorb gains faster.

To preserve efficiency, exits should be managed within the strategy. Unwinding positions independently can result in unintended gain realization.

The practical floor

In practice, many investors can efficiently reduce leverage to a modest level, typically targeting 115/15 to 120/20. Pushing materially below that typically requires selling highly appreciated positions without sufficient losses to offset them.

As gross exposure declines, the strategy’s capacity to generate excess returns and harvest additional losses also declines. That trade-off is expected during the transition.

Why you likely shouldn’t just liquidate

Liquidating the portfolio outright would likely realize significant deferred gains, including gains from appreciated long positions and profitable short positions. In some cases, the resulting tax bill can materially offset the strategy’s prior benefits.

Tax outcomes vary by individual circumstances and market conditions. Consult your tax advisor when planning an exit.

They solve different parts of the same problem, and they’re often used together.

An exchange fund lets you diversify immediately, without triggering tax, but requires a seven-year holding period. Cache Long/Short may complement that by helping you manage remaining positions more flexibly, seeking to generate tax losses to offset gains as you gradually sell shares, handle fund distributions, or plan for future liquidity events.

You can use both: an exchange fund for the portion you’re comfortable locking up, and Cache Long/Short for the portion you want to work down over time.