If he buys before he sells, that cancels the Tax loss.
it has to be 30 days either way.
If you think the stock will be down in 30 days, you sell now, and buy more in 31 days.
However, if you think the stock will increase in 30 days, you double up now, and sell in 30 days.
The reason Nov 30th is the last day, is because, if you were to sell, 30 days from now, it would be Jan 1999 and the tax loss would be in 1999.
When you buy stocks and you have a capital gain, then it is different.
you can record that 3 different ways.
#1 first in first out. The shares you bought first you sell first.
#2 You can select which shares you are selling. For instance you buy 1000 shares at $5 and later you buy 1000 at 10$ then the price of the stock increases to $15 and you sell 1000. If you choose the first block, you make a $10 per share gain. If you select the second block you only make a $5 gain.
#3 Average price of all shares bought.
now, here is where it gets tricky. When you first file a tax return and declare a gain. whichever method you choose, is the method you will be stuck with, until you fully liquidate all of your holdings.
You can't flip flop between the 3 ways.
That is why I have an accountant worry about this stuff for me.
I am busy with more important things, like getting new speakers installed, or other fun things. |
