[[We all know what the wash sale rules are, they basically stop you from
"artificially" lowering your basis.]]

Not exactly. The wash sale rules were put into place to avoid you taking a tax loss, but basically having no real economic loss (since you bought the stock back at a lower price). The "lowering basis" is really just something that happens.

[[ But I want to "artificially" INCREASE my basis. Why? Because the $$ are in a
UGMA account where the first $700 of gains are tax-free.

Is there a downside to this that I don't see? The $$ are invested in a no-load
mutual fund, so there are no transaction fees for this paper excercise.

Have I found a loophole?]]

I don't know because I don't understand what you are trying to do. You mean simply sell something at a gain and then buy it right back? No problem there. Perfectly legal. You are simply managing your income.

Not even a real loophole. We have been helping clients with that strategy for years. In fact, I think I even discuss it a bit in my post on UGMA accounts and the kiddie tax in the Taxes FAQ area. You might want to check it out.

TMF Taxes
Roy

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