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Author: knikula One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121565  
Subject: Wash Sales Date: 12/22/1999 7:34 AM
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Currently , I have a loss of about $3000 in BRK.B in a regular brokerage account. I have held it less than a year.

I have confidence in BRK.B and would like to: a) sell my shares in my regular brokerage account

AND

b) buy the same number of shares in my IRA account.

I would then claim a capital loss on the shares sold while still owning the shares.

Any tax knowledgeable folks out there know if this would fall under the wash sale rule and the capital loss be disallowed?

Thanks for any help.
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Author: elibortPrairiela One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 23545 of 121565
Subject: Re: Wash Sales Date: 12/22/1999 9:17 AM
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Scroll back about a week or so on this board and you'll find a very insightful discussion on this exact point. If I recall correctly, the 'tax knowledgeable folks' were unable to reach a consensus.

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Author: TMFTaxes Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 23635 of 121565
Subject: Re: Wash Sales Date: 12/23/1999 4:14 PM
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<<I have confidence in BRK.B and would like to: a) sell my shares in my regular brokerage account

AND

b) buy the same number of shares in my IRA account.

I would then claim a capital loss on the shares sold while still owning the shares.

Any tax knowledgeable folks out there know if this would fall under the wash sale rule and the capital loss be disallowed?>>

As Eli pointed out, we had a discussion on this very issue not too long ago. You might want to go back and check it out.

The short answer is I (me personally only...not speaking for any other tax knowledgeable folks) believe that the wash sale rules would likely apply. Others disagree. A case could be made either way, I suppose. But I personally wouldn't risk it.

TMF Taxes
Roy

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Author: jgvoelling Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 23741 of 121565
Subject: Re: Wash Sales Date: 12/26/1999 1:42 PM
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Original Message
Subject: Re: Wash Sales
Author: TMFTaxes Date: 12/23/99 4:14 PM Number: 23635
<<I have confidence in BRK.B and would like to: a) sell my shares in my regular brokerage account
AND
b) buy the same number of shares in my IRA account.
I would then claim a capital loss on the shares sold while still owning the shares.
Any tax knowledgeable folks out there know if this would fall under the wash sale rule and the capital loss be disallowed?>>

As Eli pointed out, we had a discussion on this very issue not too long ago. You might want to go back and check it out.
The short answer is I (me personally only...not speaking for any other tax knowledgeable folks) believe that the wash sale rules would likely apply. Others disagree. A case could be made either way, I suppose. But I personally wouldn't risk it.
TMF Taxes
Roy >>>>>>>>>>>>>>>----------- ------------ -------- ----------- ----------- ---------- ------------ --------- ------------ --------- -> Dear, 'TMF Taxes, Roy' I wish that you would check on this answer. I think that it would be of interest to many FOOLS. Allow me to take the other side. I would say that it is not a Wash Sale. I believe that the reason for the wash sale is to posepone the loss to a later date. With that in mind. Think about selling shares of BRK.B. (I don't know why anyone would sell Berkshire Hathaway, but it takes all kinds!), at a loss. Now at about the same time (within a month), this guy comes to his senses, and buys some shares of BRK.B in his IRA account. Now it seems that you believe that this guy is in a wash sale. Which would not allow the loss at this time. My question to you is when will he be able to take the loss. Remember the wash sale is to delay the loss not do away with it all together. I don't think I have to remind you that you can't take losses in IRAs'. I only bring this up because, I do believe this is important to some of us Fools. Thank you for answers, and Happy New Year to all. ~~~~~~~~~~~~~~~~~~~~~jgvoelling~~~~~~~~~~~~~~~~~~~~


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Author: JAFO31 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 23745 of 121565
Subject: Re: Wash Sales Date: 12/26/1999 3:05 PM
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jgvoelling:

Subject: Re: Wash Sales

TMFTaxes:

Question: <<I have confidence in BRK.B and would like to: a) sell my shares in my regular brokerage account
AND
b) buy the same number of shares in my IRA account.
I would then claim a capital loss on the shares sold while still owning the shares.
Any tax knowledgeable folks out there know if this would fall under the wash sale rule and the capital loss be disallowed?>>

Roy: "As Eli pointed out, we had a discussion on this very issue not too long ago. You might want to go back and check it out.

The short answer is I (me personally only...not speaking for any other tax knowledgeable folks) believe that the wash sale rules would likely apply. Others disagree. A case could be made either way, I suppose. But I personally wouldn't risk it.
TMF Taxes"


Dear, 'TMF Taxes, Roy' I wish that you would check on this answer. I think that it would be of interest to many FOOLS. Allow me to take the other side. I would say that it is not a Wash Sale. I believe that the reason for the wash sale is to posepone the loss to a later date. With that in mind. Think about selling shares of BRK.B. (I don't know why anyone would sell Berkshire Hathaway, but it takes all kinds!), at a loss. Now at about the same time (within a month), this guy comes to his senses, and buys some shares of BRK.B in his IRA account. Now it seems that you believe that this guy is in a wash sale. Which would not allow the loss at this time. My question to you is when will he be able to take the loss. Remember the wash sale is to delay the loss not do away with it all together. I don't think I have to remind you that you can't take losses in IRAs'. I only bring this up because, I do believe this is important to some of us Fools. Thank you for answers, and Happy New Year to all. ~~~~~~~~~~~~~~~~~~~~~jgvoelling~~~~~~~~~~~~~~~~~~~~

There is nothing for Roy to check on, unless you are willing to pay him to go get a Private Letter Ruling for you. If you had read the earlier posts, you could have seen that, and you could determine which side of the line you personally come down on.

I think the answer is unclear. You correctly point out the issue about "postponing" the loss, but the reason the loss is postponed by the wash rule is because it is not truly realized if you immediately (+/- 30 days) repurchase the stock. You still have all the upside and have only manufactured a paper loss, unless you stay out of the stock for 30 days, and take the real risk that it will appreciate while you do not own it.

I personally believe the substance behind the wash rule applies across the IRA, and that is is substantially the same as applying the trust type rules, or in legal terms, recognizing the difference between "legal" (or "record") ownership and "beneficial" ownership, but this is just my opinion and worth no more than you paid me for it.

Just my $0.02. Regards, JAFO

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Author: TMFTaxes Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 23810 of 121565
Subject: Re: Wash Sales Date: 12/27/1999 4:46 PM
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<<Dear, 'TMF Taxes, Roy' I wish that you would check on this answer. I think that it would be of interest to many FOOLS. Allow me to take the other side. I would say that it is not a Wash Sale. I believe that the reason for the wash sale is to posepone the loss to a later date. With that in mind. Think about selling shares of BRK.B. (I don't know why anyone would sell Berkshire Hathaway, but it takes all kinds!), at a loss. Now at about the same time (within a month), this guy comes to his senses, and buys some shares of BRK.B in his IRA account. Now it seems that you believe that this guy is in a wash sale. Which would not allow the loss at this time. My question to you is when will he be able to take the loss. Remember the wash sale is to delay the loss not do away with it all together. I don't think I have to remind you that you can't take losses in IRAs'. I only bring this up because, I do believe this is important to some of us Fools. Thank you for answers, and Happy New Year to all. >>

All vaild points. But it's all been hashed (and re-hashed) many times over. You might want to do a search in the folder for the most recent discussions. The only thing that I'm sure of is that there may not be a "right or wrong" answer...since there is not court case or IRS prouncement on point.

But I believe, regardless, that the IRS could make a very valid case for a wash sale in this specific instance. The wash sale rules weren't created initially to simply "postpone" the gain. They were created so that the taxpayer could not take a "tax" loss where the taxpayer had no real "economic" loss.

How things would work when another account is involved (such as an IRA account) is pure speculation. But if the IRS were to make a case, I'm sure that they would have a few suggestions.

TMF Taxes
Roy

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