The Motley Fool Discussion Boards

Previous Page

Financial Planning / Tax Strategies


Subject:  Re: I'm Impressed Date:  1/10/2011  6:38 PM
Author:  Bob78164 Number:  111913 of 127519

RV2000 writes (in part):

I put in a limit sell order for a stock on Dec 23rd. It traded on Jan 5 and settled on the 6th. I bought back in again on Jan 7th after a large decrease in price. Is this what I've heard called a wash sale? If I sell at a loss in Feb can I offset last year's gain against this year's loss next year? Or do I do it this year?

I reply:

Let me make sure I understand you correctly. On December 23, 2010, you placed a limit sell order for one of your holdings. However, the order didn't actually execute until January 5, 2011, which was your trade date. You then repurchased the stock on January 7, 2011.

You do not have a 2010 transaction at all, so this transaction will not be reported on your 2010 return (which you'll file by April 2011, unless you request an extension). (After all, at the end of the year, it was possible that the stock might never have reached the price that triggered your sell order.) You have a pair of 2011 transactions.

We are missing a crucial piece of information to determine whether the wash sale rules will affect your tax reporting. Was the January 5 sale at a gain or a loss? If a loss, then the repurchase on January 7 triggered the wash sale rule. If a gain, you have a taxable gain.

In any event, there is no provision that would permit you to carry back a 2011 capital loss to offset 2010 capital gains. --Bob
Copyright 1996-2018 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us