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Strategies & Market Trends : Income Taxes and Record Keeping ( tax )
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To: Craig Monroe who wrote (2266)7/26/1999 1:13:00 PM
From: Kaye Thomas  Read Replies (1) of 5810
 
I'm not aware of a program that handles wash sales. The question comes up frequently. Wash sales can get pretty complicated, and I'm not sure anyone fully understands how they work for short sales, so I have my doubts as to whether anyone could write software that handles all the possibilities.

It's not exactly true that it's only a year-end problem, but there's a seed of truth there. If you're completely out of any stock in which you had wash sales at the end of the year, and you stay out for at least 31 days, you'll generally end up reporting the same aggregate amount of gains and losses under the wash sale rule as if the rule didn't apply. Nowhere is it written that you have permission then to ignore the wash sale rule, but penalties in the tax area generally relate to the amount of your underpayment, and ignoring the wash sale rule in this situation doesn't produce an underpayment.

Note that if you held some stock at the beginning of the year, the wash sale rule can extend the holding period of your stock, possibly converting a short-term loss into a long-term loss. That could affect your tax bill even if you clear the books at the end of the year.

Kaye Thomas, author
Fairmark Press Tax Guide for Investors
fairmark.com
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