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Author: ptheland Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121592  
Subject: Re: Take a loss while holding cheaper shares? Date: 11/9/1999 1:12 AM
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ptheland wrote:
One thing to look out for is the "wash sale" rules. If you buy the same security from 30 days before to 30 days after your sale, it's treated as a wash and the two transactions (sale and repurchase) are ignored for tax purposes.

StillCrazyToo:
Hmmm... I know about the wash rule in re not being able to declare a loss, but I never really thought about it further. If the sale and repurchase are ignored for tax purposes, does that mean that I can turn my initial purchase of something into long-term captial gains, even if I've been trading in and out of that issue weekly?


In rereading my original reply, I see that I implied that wash sales might apply to gains as well as losses. That is not correct. Wash sales only apply when securities are sold at a loss. (Always remember that while almost all responses are really trying to be correct, you will sometimes get what you pay for!!)

Also, re "the same security" - number of shares doesn't matter? If I buy 500 shares, sell 500 shares a month later, then 10 days after that buy 200 shares of the same transaction, the whole thing is considered a wash?

The wash sale would only apply to the shares that were re-acquired. In your example, (now assuming a loss on the 500 shares), you would recognize the loss on 300 shares, but not on the 200 shares that were repurchased.


--ptheland <==blushing a light crimson
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