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: Kaye Thomas who wrote (2206)	5/13/1999 3:13:00 PM
From: Madhur	Read Replies (1) of 5810

How does the wash sale rule apply to SHORT SALES? ------------------------------------------------------------ Example1: Roundtrip1: SellShort Dec 1st, 1998 AMZN 100 shares at 100 CoverBuy Dec 31st,1998 AMZN 100 shares at 110 Loss of $1000 ($10 x 100 shares) Roundtrip2: Buy AMZN Jan 15th,1999 AMZN 100 shares 110 Sell AMZN Jan 16th,1999 AMZN 100 shares 120 Gain of $1000 ($10 x 100 shares) Is the roundtrip2 making the roundtrip1 a WASH SALE, so that you could not claim the $100 loss in tax year 1998? The tax code only talks about sell and then buy back +/- 30 days! ------------------------------------------------------------ Example2: If you would not do a short sale but a regular long sale: Roundtrip1: Buy Dec 31st,1998 AMZN 100 shares at 110 Sell Dec 1st ,1998 AMZN 100 shares at 100 Loss of $1000 ($10 x 100 shares) Roundtrip2: Buy AMZN Jan 15th,1999 AMZN 100 shares 110 Sell AMZN Jan 16th,1999 AMZN 100 shares 120 Gain of $1000 ($10 x 100 shares) This obviously makes the roundtrip1 a WASH SALE, so that you could not claim the $100 loss in tax year 1998 Thank you for your time Madhur

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