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This may be a dumb question, but...

If I sell 100 shares of FOOL (at a loss) in my brokerage account, and on the same day I buy 100 shares of FOOL in an IRA, is that considered a wash sale?

I'm assuming it doesn't, since the IRA is in its own tax-deferred universe, but I'd kinda like some backup...

Thanks!
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If I sell 100 shares of FOOL (at a loss) in my brokerage account, and on the same day I buy 100 shares of FOOL in an IRA, is that considered a wash sale?

I'm assuming it doesn't, since the IRA is in its own tax-deferred universe,....


Your assumption is correct. It's not a wash sale.
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albin1:

<<<<If I sell 100 shares of FOOL (at a loss) in my brokerage account, and on the same day I buy 100 shares of FOOL in an IRA, is that considered a wash sale?

I'm assuming it doesn't, since the IRA is in its own tax-deferred universe,....>>>>

"Your assumption is correct. It's not a wash sale."

Contrary to the prior response, I do not believe that the answer is clear-cut [unless I have missed something in the last month]. The problem is that there is no defintive word in the IRC.

ZThis issue has been discussed, at length, several times on this board. Sorry, but I do not have the posts marked (maybe pmarti does). I believe that reasonable people can disagree about this issue, and I further believe that more of the regulars on this board were either undecided or thought that it might be a wash sale, but at least one or more of the other regulars thought otherwise.

Regards, JAFO

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You might try brewing a LARGE pot of coffee, typing "wash IRA" into the search box above, then sitting back and perusing the discussion on this topic.

--Peter
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D'oh! I thought this was a "the answer is obvious" stupid question-- turns out it was a "we've argued this to death and we don't know" stupid question. Sorry!

(The "FAQ" page didn't seem to mention it, so I went ahead and asked without searching first-- sorry 'bout that.)

Thanks much!

--JP
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P.S. I do have a good, Foolish reason for wanting to make the sale-- I got the stock in question by exercising ISOs, and the stock tanked. Result-- I owed AMT for 2000, and I'll want to realize enough AMT loss this year to get the money back in 2002. So I'm thinking I may sell to realize the AMT loss, while maintaining some stake in the company by buying in my IRA. But, of course, this is exactly the kind of strategy that the Wash Rule was invented to block, so the IRS probably wouldn't like it much...

Oh, well. I have until December to do this... I'll probably buy an early copy of TurboTax this year, run the numbers, and see what to do.

Thanks again!

--JP
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I asked this question through the IRS e-mail tax law question service. The answer I got was that it's not a wash sale if sold at a loss and then repurchased through an IRA account.

Since then I've seen it published in 2 tax articles.

So feel safe to repurchase in your IRA.

acm4tax@excite.com

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I asked this question through the IRS e-mail tax law question service.
The answer I got was that it's not a wash sale if sold at a loss and
then repurchased through an IRA account.

Since then I've seen it published in 2 tax articles.

So feel safe to repurchase in your IRA.

acm4tax@excite.com


I wouldn't feee so safe. In previous quotes on this subject the IRS syntax is such that you can probably read it that way but they are probably saying that there is no wash sale in an IRA. I suggest you re-read *carefully* with the intent to mislead you in mind. You can't relay on their responses in either case.

The down-side of this is that once done there is no wasy to recover the loss inan IRA. ed
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P.S. I do have a good, Foolish reason for wanting to make the sale-- I
got the stock in question by exercising ISOs, and the stock tanked.
Result-- I owed AMT for 2000, and I'll want to realize enough AMT
loss this year to get the money back in 2002. So I'm thinking I may
sell to realize the AMT loss, while maintaining some stake in the
company by buying in my IRA. But, of course, this is exactly the kind
of strategy that the Wash Rule was invented to block, so the IRS
probably wouldn't like it much...

Oh, well. I have until December to do this... I'll probably buy an
early copy of TurboTax this year, run the numbers, and see what to
do.


Why don't you just wait 31 days to purchase ian your IRA? Also, I presume you know that your AMT losses are limite to $3,000 by the Capital Loss Limitation so depending on the size of the loss and other LT P/L you might not recover as much AMT as you think. ed
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'Why don't you just wait 31 days to purchase ian your IRA?'

Because I'm also small-F foolish... I really think this company is going to come back *some*. (I worked for them for three years-- they were overvalued before, but I think they're undervalued now.) And when they do come back, it might be all at once, during the 31 days... so I don't want to not-be-invested-in-them. I'd rather keep my investment total the same, even if some of it is untouchable (in my IRA).
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