Income Taxes and Record Keeping ( tax ) Message Board

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Strategies & Market Trends : Income Taxes and Record Keeping ( tax )

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To: professor who wrote (2226)	7/2/1999 2:06:00 PM
From: Kaye Thomas	Read Replies (1) of 5810

The question about selling in a taxable account and buying in an IRA within 30 days comes up quite often. Strangely enough, there's no direct authority on the point. There are, however, cases where the courts have sided with the IRS in disallowing deductions when a taxpayer sells at a loss and, as part of a plan, a related person buys identical property at about the same time. For this purpose an IRA would be a "related person," so it's likely that the IRS would disallow the loss in this instance. Technically this is not under the wash sale rule, but rather under the rule for disallowing losses on sales to related persons. Of course, you're selling on the open market, not selling to your IRA. But the IRS view, sustained by the courts, is that when you sell on the open market and cause your IRA to buy on the open market at about the same time, that's equivalent to selling to your IRA. There's a page on my web site discussing this issue: fairmark.com Kaye Thomas, author Fairmark Press Tax Guide for Investors fairmark.com

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