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I have a loss in NXTL in my personal account--500sh bought at 28.5 and it's now 23-24. I like the stock.
Could I sell it from my personal account and buy it the same time in my Keogh account and take a loss for '97 taxes, or do the wash sale rules apply because I am the promary beneficiary of my Keogh trust?
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<<I have a loss in NXTL in my personal account--500sh bought at 28.5 and it's now 23-24. I like the stock.
Could I sell it from my personal account and buy it the same time in my Keogh account and take a loss for '97 taxes, or do the wash sale rules apply because I am the promary beneficiary of my Keogh trust?>>

The answer is that no one can tell for sure. As written in the Internal Revenue Code, the wash sale rule does not appear to apply to this transaction. However, the IRS has succeeded in disallowing losses in somewhat analogous situations, leading some experts to conclude that there is in effect a "common law" wash sale rule. It's possible that the IRS would disallow a loss in the situation you describe, and the courts might very well side with the IRS.

If you took a chance on this and lost, your situation would be worse than in a normal wash sale. The reason is that a wash sale merely defers loss until the replacement securities are sold. In the transaction you describe, however, the replacement securities are in your Keogh, which can't use the loss. The potential tax benefit of claiming the loss would be gone forever. Not exactly a crushing blow for this amount of loss, but worth noting.

KAT in Chicagoland
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<<

I have a loss in NXTL in my personal account--500sh bought at 28.5 and it's now 23-24. I like the
stock.
Could I sell it from my personal account and buy it the same time in my Keogh account and take a
loss for '97 taxes, or do the wash sale rules apply because I am the promary beneficiary of my
Keogh trust?>>

KAT provided you with an EXCELLENT reply!!! If you haven't read it, you should really take the time to do so.

One of the reasons that it is EXCELLENT is because it agrees with my position on the question: you don't really know for sure, but it probably isn't worth the risk.

I'm glad that I'm on the right side of an issue for once.

TMF Taxes
Roy
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