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Strategies & Market Trends : Stock Attack -- A Complete Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Stephen who wrote (39467)	12/28/2000 12:15:19 PM
From: adcpres	Read Replies (1) \| Respond to of 42787

Stephen: For practical purposes what you say is true BUT if you ever get audited, improper bookkeeping could be a nightmare and make your life a living hell if your auditor is in a bad mood. Jeffery Whittman made a suggestion to circumvent the wash sale rule -- Sorry but his suggestion is technically wrong. According to the IRS, the wash sale rule applies whenever you sell or trade stock at a loss AND within 30 days BEFORE or AFTER the sale you buy or acquire substantially identical stock. So in essence there is a 60 day window centered around the loss sale for which the rule applies. Basically the wash sale rule works like this: Say you sell a block of stock X at a loss on Dec. 20 and within 30 days before or after the sale you purchase the same stock X, you must now defer the loss from the sale to the future sale of the NEW block/blocks purchased or any purchases afterwards until the number of shares are matched. You cannot take the loss immediately against other gains because of the new purchase. So the loss is deferred to the future and is added to the basis of any stock X purchased between Nov. 20 to Jan. 10. Even if on Dec. 20 or between Nov. 20 to Jan. 10 you sold other blocks of stock X, Y, or Z at a gain from earlier purchases, you cannot use the loss sale made on Dec. 20 to offset the gain on those securities. The moment you purchase new stock within the 30 day period before or after the loss sale, you have surrendered the ability to use that loss to offset earlier gains. Sorry but that's how I understand the rules read as of 1999 filing. What is important in all this is to get the latest rules. What applied in previous years is changing because of the popularity of on line trading and day trading in particular. The old rules are constantly being challenged and are "refined/interpreted" by judicial revue in tax court. If you need further explanation, send me a private message and I will give you my phone#. It would be easier than trying to write it down. Good luck. GH