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The wash sale rule only applies to selling for a loss.
If it did not exist, you could sell out on a day when the market was overreacting to everything and claim a loss, then buy back the next day. You would thus avoid paying taxes. Maybe you'd even be tempted to put phony information about Emulex out on the net, sell at the beginning of the panic, buy back minutes later for an even lower price and make a bundle. With the wash sale rule people can't do that.
When you sell at a profit you have taxes to pay, so there is no reason to sell, then buy back right away to avoid tax. You can buy back in whenever you like.


I understand how the wash rule works with respect to selling at a loss and then buying back...

Maybe my question is more general, or not about the "wash" rule. I'm selling at a profit, then, potentially, buying right back. Now, in a normal situation this is just raising your cost basis and paying some taxes. The IRS has no problem with this. However, if I didn't do this I would have been subjected to a much larger AMT tax (for 2000 tax year). There are IRS rules that have to do with transactions that are done solely for tax purposes (i.e. to reduce taxes) that are not allowed.

I guess this is what I am asking about.


Mike
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