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Strategies & Market Trends : Income Taxes and Record Keeping ( tax ) -- Ignore unavailable to you. Want to Upgrade?

To: Jonas1 who wrote (2262)	7/14/1999 5:52:00 PM
From: Kaye Thomas	Read Replies (2) \| Respond to of 5810

Gosh, I'm depressed that my site didn't make everything crystal clear (lol). The wash sale rule never applies to a sale at a gain. If you sell at a gain and buy back within 30 days you have the same result as if you sell at a gain and buy back after 31 days. It simply doesn't matter that you bought the same stock again, even if you bought it back five minutes later. And it wouldn't matter if you have a series of purchases as in your FIFO example. Here's what happens in your last example. You sold at a $20 loss but you bought again within 30 days, so it was a wash sale. You can't claim the loss, but you add the disallowed loss to your basis. You paid $80 for the stock, but you're treated as if you paid $100, because that's your basis. If you sell it for $80 and don't repurchase, you'll report a $20 loss. The holding period for the replacement stock includes the holding period of the stock you sold. Usually that's bad, because the replacement stock has a built-in loss, and the longer holding period can turn that into a long-term loss, which is bad. But if the stock recovers, this will work to your benefit because it may permit you to report a long-term capital gain. Kaye Thomas, author Fairmark Press Tax Guide for Investors fairmark.com

To: Jonas1 who wrote (2262)	7/16/1999 5:27:00 PM
From: Craig Monroe	Read Replies (2) \| Respond to of 5810

A bit off-topic but I'm looking for some input and don't know how to start another thread Regarding Wash sales If you take a small loss and then repurchase the same stock, you're supposed to add the loss to the basis of your second purchase. So far so good. Does anyone use a portfolio manager program that will take this into account. Alternately, does anyone have a means of keeping track of trades like this. I've been told that this issue only comes up at the end of the year so it's a non-issue if you are in cash before year end. Is this true? Thanks