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bayoufool3: "I have been throwing around the following strategy for a bit and have been unable to convince myself that it is unsound. I am hoping someone with more extensive knowledge could lend a verdict here.

I have owned a stock for less than one year which has experienced a substantial drop (who'd guessed?). It seems there is no reason for me not to sell it now and get the short term capital loss. Then in a separate decision, decide to immediately buy it back or some other stock I believe to be a better purchase. I am a buy-n-hold guy but tax diff here seems to make sense."


You are ignoring the Wash Sale rule. If you buy the same stock (acutally substantially identical stock, IIRC) within thirty days before or thirty days after you sell it for a loss, you cannot take the loss but must adjust your basis on the repurchased shares.

Much prior discussion about Wash SAles on this board, and it is discussed in the FAQ (but the title is not Wash Sales< IRRC) <<<Phil - HINT, HINT>>>

Regards, JAFO



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