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Technology Stocks : Compaq
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To: JGibbs who wrote (22349)3/17/1998 11:51:00 PM
From: Pavel   of 97611
 
Wash Sale
Summary:

1) you sell the stock now

a) and the price goes down:
aa) you can buy it back within 30 days and you cannot take a tax loss deduction - you however bought for less and therefore lowered your break even price = better than holding the stock, you lose the tax deduction $$$.
ab) you buy it back after the 30 day period - you can take a tax break and lower your break even price.

b) and the price goes up:
ba) you can buy back within 30 days - you can add the loss from a wash sale and add it to the cost of the new stock to obtain the new price basis = non-event
bb) you can buy back after the 30 day period - you can take a tax break, but you lose your position in the stock = you need to compare your tax break and the difference between your sale price and the current price in order to determine where you stand.

Pavel
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