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Under the statute you can get the denied loss back when you sell the stock that created the wash sale. They don't say how that's treated in an IRA.

That's the issue I've always struggled with. So what is your answer? I've never really come up with a satisfactory one.

Noting again for the record that I'd like to see IRS's ruling challenged, the tax benefit of the loss disappears.

I disagree with Ed in that I don't think the IRS left it hanging at all. It's already established that when the wash sale rule applies you add the disallowed loss to the basis of the replacement shares and adjust their holding period. What's to clarify?

Of course, since the IRA is a tax-exempt entity that's all an exercise in futility.

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