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Author: ptheland Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121061  
Subject: Re: Wash sale? Date: 6/24/2006 1:21 AM
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Why were the wash rules establihed? To reduce the possibility of taxpayers selling for tax losses and repurchase the same shares for a short term tax reduction.

Agreed. The financial position of the taxpayer is basically unaltered. But they would have reduced their taxes by this action.

You are not selling to get a short-term reduction on your taxes (as a matter of fact, you would sell regardless of gain or loss).

Probably not. To be an issue, the sale at a loss needs to be in a taxable account. Selling at a loss in the IRA is not a taxable event. And there are certainly a number of folks who would sell at a loss specifically for the tax reduction. If it were clearly OK to do so, who wouldn't? It could be a viable tax reduction strategy.

I'm sure someone will test this before long and we'll have an answer.

Doubtful. The necessary wash sale and related party rules have been on the books for many years. And there have been no tests to date. I'm not holding my breath.

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