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Strategies & Market Trends : Stock Attack -- A Complete Analysis

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To: xxxwiesia who wrote (39529)	12/28/2000 5:44:51 PM
From: adcpres	Read Replies (2) of 42787

xxxwiesia: To use the loss of $15,000 on the second purchase against any gains, you first have to sell the stock from the second purchase. If you think it may come back soon, you may not want to sell. In that case, you would add the $6000 loss from the first sale to the cost basis of the second purchase which would then offset any gains or add to any losses you have when you sell the second block of company X. You cannot claim loss for stock you have not sold no matter how far under water you may be. An exception is if the stock is no longer traded and valued worthless and there does not appear any chance the company can continue business. You then claim it has zero value. A letter from the broker or company stating the stock is worthless would be advisable and good insurance in case of an audit. -------------------------------------------------------- Can i do this?>>>not claim $6000 loss on 1st. buy & sell and instead use the $15,000 loss against my gains? i have not sold my 2nd. purchase yet...have 1 more day to sell. NO YOU CANNOT DO THIS UNLESS YOU SELL THE 2nd PURCHASE You may be underwater but haven't realized a loss until you sell. If you sell the second purchase tomorrow then you can claim a loss of $21K for the year to offset any short term gains. This assumes of course all transaction took place this year(short term gains). You would not show a loss on the first purchase since it is a wash sale and would be stated as such on schedule D. The $6000 loss from that first sale would be added to the basis of the second purchase and if the second purchase was sold tomorrow you would show a loss for it of $21K (you are down by $21K = sale price - adjusted purchase price) The adjusted purchase price = original purchase price of 2nd purchase + $6000. Hope that helps. Get a copy of pub. 550 and a bottle of whiskey. You may have to read the IRS explanation and examples several time before you start to understand what they are saying. Sometimes the wording is not clear and the whiskey helps <gg>. GH

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