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Author: phooley Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 120809  
Subject: Re: Wash sale on two accounts Date: 10/10/2000 8:24 PM
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Bart,

I am a bit confused.

OK -- let's see what the confusion is.

Are you saying that you can get around the 30 day waiting period by swaping stock with your wife?

No, absolutely NOT! What I said was:
IRS Publication 550 is pretty clear:

First, they define the general idea of what
constitutes a wash sale. Then they go on:

If you sell stock and your spouse or a corporation you
control buys substantially identical stock, you also have
a wash sale.


So it doesn't matter whether you file jointly or
separately, if you and your wife make trades as you
described, you'd have a wash sale.
It's a good idea to check the IRS publication first -- at least, read enough of IRS Publication 550 to understand a wash sale. I was answering the original question posed by sangwook by explaining that the situation he had proposed (in <http://boards.fool.com/Message.asp?mid=13408326>) would, indeed, consititute a wash sale -- meaning that if the stock had gone down, sangwook sold it in one account and sangwook's spouse bought it in another account, they would lose the ability to take immediate advantage of that loss because they wouldn't have a valid sale, but rather a "wash sale."

You go on:

I am suprised that the IRS would allow this.

And you should be surprised, because the IRS will not allow it.

When the IRS states "if you do X you have a wash sale" do they mean that the wash sale rules apply for this transaction?

Yes, that's what they mean...

Which would mean you can not wash the stock in the above case.

I think I begin to see the problem -- you're using the term "wash" to mean that the sale has somehow been "cleaned up" so you can take the loss -- but in reality, as I explained, the IRS considers that you are not eligible to claim the loss, because you had a sale and a purchase, and the result is a "wash".

Before you take whatever action you're contemplating, you should review the IRS publications, and even try filling out a Form 1040 Schedule D, to make sure you understand what's going on.

Also check the FAQ -- follow the link above -- and look for "wash".

Good luck!
Phooley
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