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Author: BruceCM Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76419  
Subject: Re: Retirement account and mark-to-market electi Date: 9/19/2013 12:59 AM
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I know that a trade of a like security in a tax advantaged retirement account within 30 days of a losing trade in a taxable account may require that I pay taxes on gains in the tax-advantaged account & possibly interest & penalties. Is this still true if I make the MTM election?

I don't believe that's true. Only UBTI exceeding $1,000 will require a tax deferred account (not you) to pay tax. I cannot think of another situation for which a tax deferred account would be subject to taxation.

Failing the 30 day holding period of the wash sale rule by selling at a loss in a taxable account when you purchased 'substantially identical' stock in a tax deferred account either within 30 days prior to or 30 days following the sale, will result in losing the deductibility of the loss.

I have no experience with MTM, but my understanding is that wash sale rules do not apply to those who make the MTM election, as you already have to declare as ordinary income all net gains at the end of the year and gains are treated as ordinary income, not capital gains, so there really isn't any basis to adjust with a wash sale.

I'd suggest you post this question at Kaye Thomas web site at www.fairmark.com. The folks there are very good at handling tough tax questions.

BruceM
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