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Author: zman49 Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121150  
Subject: Re: Wash Sale and Mergers Date: 5/8/2000 2:35 PM
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If I buy 100 shares of DODV at $18 a share. Then sell the 100 shares at $12. Then buy 50 shares of the MDEA (the company purchasing DODV) within 30 days of selling the DODV shares, is this a wash sale? If no, what if I do the same thing, but two days prior the completion of the deal?

In the case of a merger, my understanding is that it could be a wash sale if

(1) The merger agreement is final, no longer subject to an approval or tender process, and

(2) The stock from one company will be coverted to stock of the other company at a fixed ratio.

In other words, if it is a certainty that 100 shares of DODV will be exchanged for a set number of shares of MDEA, then 100 shares of DODV is considered "substantially idendical" to that number of shares of MDEA and the wash sales rule would be invoked in the transactions you described.

I am not a tax guru or a CPA, but I have spent a lot of time looking at tax regulations and issues recently.

I know it is tough when you get conflicting answers to a question. I hope you get a thrid response clarifying the issue.

Good Luck,
Z
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