"Perhaps you should sell it and then immediately buy it back. "
FYI, you can't do that. You have to wait 30 days, or it becomes a "wash sale" and you can't take the loss.
You're not totally screwed, though, because you then increase your cost basis on the bought-back shares.
Example: You buy 100 shares of XYZ at 10. On December 30, you sell 100 shares of XYZ at 5. You buy back 100 shares of XYZ on January 2, 4 for 4 1/2.
You have a "wash sale". You have realized a $500 loss, but you can NOT deduct the lost in 1998. Instead, you increase your cost basis on the new shares. Although you only paid $450 for the new shares of XYZ, your cost basis is $950. If you subsequently sold the shares for 20, you would pay taxes on a gain of only $1050, not the actual $1550 gain.
If you wait 30 days before buying the stock back, you do not have a wash sale, and can claim the loss in 1998. |
