This Treasury wash sale becomes all the better if you can avoid the capital gain taxes.
For individual stocks, it's a simple affair not to run afoul of the wash sale rule.
The good news for wash sale scofflaws is that getting a wash sale disallowed is rare.
This means you can sell the stock at a gain and quickly repurchase without wash sale problems. 1.
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Unfortunately, his broker will probably report every one of the potential wash sale losses and total them up, too.
Last year in Revenue Ruling 2008-5, the IRS explicitly said this would run afoul of the wash sale rule.
Trade-accounting software like TradeLog follows a wash sale condition from beginning to end.
The trader triggered wash sale loss conditions on most days of the year.
Stay out of the losers for 31 days (to avoid the "wash sale" rule limiting tax deductions), then get back in.
Under its own rules Donohue argued the investment bank's planned move of its outstanding positions constituted an illegal trade--a wash sale.
That depends on the likelihood of substantially similar (but not identical) index funds or ETFs getting around the IRS wash sale rules.
The wash sale prevents a loss from being realized if a substantially identical security is repurchased within 30 days of a sale.
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Wash sale losses are added to cost basis on the replacement position.
The law forbids deductions for capital losses in a wash sale.
Alert: If you are tempted to sell appreciated stock before the end of the year, you may also be concerned about the wash sale rule.
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Often, when a wash sale loss is triggered, it goes away when the trader sells replacement positions at a large enough gain to absorb the deferred wash sale losses.
This rule is called the "wash sale" rule, and it says that when you sell something for a tax loss and then buy it right back you can't claim the loss.
Also, if you thought you might be able to get around the wash sale rule by replacing the sold security with the same or substantially identical one in your IRA, think again.
If you truly believe in the long-term potential of the asset with a realized capital loss, then you can always purchase it back after 30 days when the wash sale rule has expired.
The wash sale rule says that if you sell a stock or mutual fund for a loss and buy back a "substantially identical" security within 31 days of selling it, your loss is disallowed.
Lorence notes that wash sale treatment depends on whether the ETF holds a basket of securities or if the ETF or exchange-traded note (ETN) is a security such as an option or debt instrument.
Since individual investors using this strategy must wait 30 days before repurchasing any stock sold at a loss to avoid triggering the wash sale rule, these stocks can decline in December and rise in January.
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So if an investor bought shares of a stock in his IRA within 30 days of selling shares of the same stock at a loss from a joint account, then it is up to him to tell the IRS about the wash sale.
Second, in order to recognize the losses, you must not acquire the same or a substantially identical security within 31 days before or after your sale. (This is known as the wash sale rule.) The sale of part or all of your stock portfolio changes your asset allocation.
"Old case law is fairly narrow about treating something as substantially identical, but the problem for the adviser and the investor is that the IRS may take more aggressive positions, " says Stevie Conlon, tax director for Gainskeeper.com, which provides software to advisers that helps them keep clients in line with the wash sale rule.
But if you want to make sure your losses do some good for you this year, you need to pay attention to something called the "wash sale rule, " which disallows a realized loss if you purchase the same, or "substantially identical securities, " 30 days before or 30 days after the day you booked the loss.
At least 30 days must pass before the investor can re-buy the securities or the ability to deduct the loss is delayed as a violation of the wash-sale rule.
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