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Author: phooley Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 120812  
Subject: Re: Wash rule & Co stock purch plan Date: 8/22/2001 10:28 PM
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wcw22,

I've got a question about my company stock purchase plan and wash sale rules. I participate in my company stock purchase plan with a 15% discount. However, to avoid too large a concentration of assets in my company (my 401K holdings and my income), I've been holding my stock purchase shares one year and selling. The idea behind holding one year was to take advantage of the capital gains tax rate. This has worked well for my company stock which has a fairly steady price appreciation.

All of a sudden it occurred to me I might be violating the wash sale rule, which states (in lay terms) that gains from a sale occurring 30 days before or after a purchase is taxable at regular income tax rates, not as a capital gain (in effect the purchase creates a 60 day window, any sale within that 60 day window is a sale of those shares).

Since my stock purchase plan makes its purchases on the first day of each quarter. Does this mean the only time I can sell company stock is in the months of February, May, August, and November?

If you can point me to any information answering this question, I'd appreciate the effort!


Here's an excerpt from the "Wash Sales" item from this board's FAQ:

Under the wash sale rules, if you sell stock for a loss and buy it back within the 30-day period before or after the loss-sale date, the loss cannot be immediately claimed for tax purposes.

Answering most questions about wash sales usually takes more than quoting one sentence -- but it you read, and possibly re-read, that sentence, and compare it to the interpretation you gave in your post, I think you'll see why you have nothing to worry about! At least not as long as your stock is going up!

Hope this helps,
Phooley in Phoenix
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