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Technology Stocks : QUANTUM -- Ignore unavailable to you. Want to Upgrade?

To: RealMuLan who wrote (7422)	3/3/1998 12:24:00 PM
From: Joe Hoek	Read Replies (1) \| Respond to of 9124

Wash sales - correction. <<Wash sale is only relevant on year to year basis.>> Not true. A wash sale is defined as purchasing the same or similar security within a thirty day period of selling a security at a loss. The losss is disallowed, but can be added (subtracted) from the basis of the new purchase. It doesn't matter what tax year you are in, only the 30 day rule. If you sold a stock at a loss on 12/15/97 and bought it back on 01/10/98 (less than 30 days) you can not deduct the loss on your 97 taxes. If you sell the stock in 98, you add the loss to your basis of the new purchase. I don't have the IRS publication with me, but can post it later is anyone is interested. Example: Purchased 1000 shares xyz co on 08/25/97 @ $10.00 per share $10,000 Sell 1000 shares xyz co on 12/15/97 @ $6.00 per share $ 6,000 $4000 loss. Purchased 1000 shares xyz co on 01/10/98 @ $4.00 per share $ 4,000 Sell 1000 shares xyz co on 02/28/98 @ $7.00 per share $ 7,000. You cannot deduct the $4,000 loss on your '97 taxes because you rebought within 30 days of selling. (Doesn't matter if you bought higher or lower). But you basis for the second purchase isn't $4,000, it's $8,000 ($4000 purchase + $4000 loss). So you net is -$1000 ($7000 - $8000). (Same as 6,000 - 10,000 + 7,000 - 4,000) = -$1,000 but it's how you report it, and when you report it that makes the difference. Hope this helps, I know it confuses a lot of people (including me the first time I did this). Disclaimer - check with your tax and/or financial advisor - do not take my word(s) for it. Thanks for the good info posted thus far Joe Hoek