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I`d appreciate if anyone could help out here. I`m not familiar with US tax law and my query goes like this:

About a year ago a dear realtive set up a trust for her grandchildren. She bought a fair number of tech shares and now are about 50% of their previous value. She does not want to part with any of the companies and believes them to be good. Would it be possible for her to sell all her stocks and deduct this loss for tax purposes even if she were to repurchase them a week later? Is this a genuinely legal way of claiming losses and reducing the tax bill?
I`d be grateful for anyone able to shed any light on my question.

Thanks

giraffe

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Would it be possible for her to sell all her stocks and deduct this loss for tax purposes even if she were to repurchase them a week later? Is this a genuinely legal way of claiming losses and reducing the tax bill?

No. Unless she waits 30 days after the sale before repurchasing, it is a "wash sale." (The wash sale rule also applies if she buys the "replacement" shares before the sale for a loss.)

This is discussed in the FAQ.

Phil Marti
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Phil,

Thanks for your prompt response. Does this mean that 30 days must lapse before repurchasing for the transaction not to be classed as a wash sale. How about 32 days later?

giraffe
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Thanks for your prompt response. Does this mean that 30 days must lapse before repurchasing for the transaction not to be classed as a wash sale.

Yes.

How about 32 days later?

That's more than 30 days, so no problem.

Phil Marti
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