Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Senator949 who wrote (28218)	6/25/1998 1:24:00 PM
From: Mike Fredericks	Respond to of 97611

Robin- If you sell a security at a loss, but you buy the same security within 30 days, you do not get to take the loss. Rather, the loss gets added to the cost basis of the purchase immediately following the loss. For example, I buy 100 sh stock X @ 10, sell @ 9. Then it shoots up to 10 the next day so I buy it back at 10. My original cost basis was 10010 = $1000 I grossed 100 $9 = $900 on the sale, so I lost $100. When I purchased the stock again at $10, it cost me $1000, but for tax purposes my cost basis is $1000 + the $100 loss = $1100. The IRS has this rule because say you had a bunch of capital gains and didn't want to pay taxes. You could sell a stock that you're currently losing on, and then 10 minutes later buy it right back. If the loss took effect that day, you could offset your gains, and in essence postpone having to pay taxes. Note that you still end up with the same amount of gains or losses this way, you just defer the losses until later. IE in the example above, at the end you were holding shares with a cost basis of $1100. If you sold those shares at $11 later, you would break even. Which makes sense because you lost $100 on the first transaction ($10 -> $9) and then made $100 on the second ($10 -> $11). Sorry if I got long-winded. -mike

To: Senator949 who wrote (28218)	6/25/1998 1:49:00 PM
From: Wayners	Respond to of 97611

Wash sales are when you sell (for long positions) something for a loss and then buy it or similar securities back within 30 days of the loss occurring. If you don't wait 30 days, you can't claim the loss against other capital gains you might have. Of course there is no such thing as the wash sales rule on gains. #$%&@ Government!! To be fair with the wash sales rule, we should also be able to collect capital gains by selling stock XYZ and buy back into XYZ within 30 days at a lower price and NOT INCUR ANY CAPITAL GAINS TAX.