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I have some stock that I bought in small amounts over a long period of time. The stock price is down more than 50% so I decided to reset my basis by selling some of the stock that I have held for over a year and then buy it back at a lower price racking up a long-term capital loss.

So I did this in steps using FIFO. Then when I wanted to buy the stock back, I waited for more than 30 days and bought back the amount of stock I had sold. fortunately the stock declined another couple of dollars by this time so I made bad a little of the loss.

But now I held more of this stock for more than a year. I plan to wait more than 30 days after buying the stock back before I sell some more on FIFO but is this really necessary?

Once I due sell that stock, I will wait more than 30 days before i buy it back.

brucedoe
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So I did this in steps using FIFO. Then when I wanted to buy the stock back, I waited for more than 30 days and bought back the amount of stock I had sold. fortunately the stock declined another couple of dollars by this time so I made bad a little of the loss.

But now I held more of this stock for more than a year. I plan to wait more than 30 days after buying the stock back before I sell some more on FIFO but is this really necessary?


I think the relevant issues are replacement shares and the 30-day window.
Are there replacement shares involved here? Sure there are
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So I did this in steps using FIFO. Then when I wanted to buy the stock back, I waited for more than 30 days and bought back the amount of stock I had sold. fortunately the stock declined another couple of dollars by this time so I made bad a little of the loss.

O.KL. Your sale is NOT a wash sale because you waited 30 days.

But now I held more of this stock for more than a year.

When you sold the first batch you knew that it was over a year. Has nothing to do with the new purchase. I gather you are trying to avoid long term losses, but it doesn't make any difference. They will either offset gains this year, or become part of your $3,000 allowed ordinary income offset, or carry forward to offset loing term gains or short term gains, etc. The only dissadvantage would be if you had to use LTCL to offset LTCG instead of STCG.

I plan to wait more than 30 days after buying the stock back before I sell some more on FIFO but is this really necessary

Yes, It is necessary. The 30 day wait is between the date of selling and the date of buying, whether one preceedes the other. Has nothing to do with FIFO which establishes which shares you sold that might become a wash sale.


Sorry if I didn't understand your question.

ed
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I'm a bit confused by your description of the dates. Can you just give the actual dates of your purchases and sales, along with the number of shares? That would make identifying potential wash sales much easier.

--Peter
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Bought 10     09/06/07     Sold    05/26/09
Bought 40     12/27/08     Sold    05/11/09
Bought 10     01/15/08     Sold    05/11/09

Bought 50     06/30/09

Want to Sell
Bought 10     06/10/08

Do I have to wait until August to sell FIFO?
Also have shares bought between 10/17/08 and 03/03/09 which I plan to keep.

brucedoe
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Bought 10 09/06/07 Sold 05/26/09
Bought 40 12/27/08 Sold 05/11/09
Bought 10 01/15/08 Sold 05/11/09

Bought 50 06/30/09

Want to Sell
Bought 10 06/10/08

Do I have to wait until August to sell FIFO?
Also have shares bought between 10/17/08 and 03/03/09 which I plan to keep.

brucedoe
================================================
Yes. Not exactly until August. If you sell prior to July 30 (31 days after the 50-share purchase on June 30), that purchase will create a wash to the extent of 50 shares sold.

I assume you're selling at a loss - prices not indicated - or else this discussion is moot.

Also, I think those 10 sh. bought on June 10 already creates a wash sale on 10 of the shares that were sold 5/11. (Again, assuming a loss occurred.) That purchase was exactly 30 days after the fact, which is one day too soon, as I understand the rule.

Bill
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Bought 10 09/06/07 Sold 05/26/09
Bought 40 12/27/08 Sold 05/11/09
Bought 10 01/15/08 Sold 05/11/09


Unless there's separate accounts involved, FIFO has not been followed here.
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I note that the 40 sh listed as sold 12/27/08 should be 12/27/07. My apologies. Thus

Bought 10 09/06/07 Sold 05/26/09
Bought 40 12/27/07 Sold 05/11/09
Bought 10 01/15/08 Sold 05/11/09

The 50 shares bought back on June 30, 2009 were all more than 30 days after the last sale which was on May 26, 2009.

The shares bought June 10, 2008, now over a year ago, have not been sold as yet, so I will wait until August to do that and then buy back in September.

Yes, all the sold shares were sold at a great loss. These long term capital losses will take a couple of years to work off.

brucedoe
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I note that the 40 sh listed as sold 12/27/08 should be 12/27/07. My apologies. Thus

Bought 10 09/06/07 Sold 05/26/09
Bought 40 12/27/07 Sold 05/11/09
Bought 10 01/15/08 Sold 05/11/09

The 50 shares bought back on June 30, 2009 were all more than 30 days after the last sale which was on May 26, 2009.

The shares bought June 10, 2008, now over a year ago, have not been sold as yet, so I will wait until August to do that and then buy back in September.

Yes, all the sold shares were sold at a great loss. These long term capital losses will take a couple of years to work off.

brucedoe


I hate to beat a dead horse, but even with the correction, you are still not doing FIFO. Based on the above data, you are doing LIFO (Last In, First Out) i.e. the last shares you purchased --
Bought 10 01/15/08

became the first shares you sold--
Sold 05/11/09


Based on this error, I cannot comment on your June 2008 purchase.
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Bought 10 09/06/07 Sold 05/26/09
Bought 40 12/27/07 Sold 05/11/09
Bought 10 01/15/08 Sold 05/11/09


If you didn't hold any shares after 5/26/09
FIFO would be:
Bought 10 09/06/07 Sold 05/11/09
Bought 40 12/27/07 Sold 05/11/09
Bought 10 01/15/08 Sold 05/26/09
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vkg

Probably so. My understanding is that unless you give the broker directions, they do FIFO.

Alas, this dicussion kind of got off the question which was having bought 50 shares on June 30th (which was more than 30 days past the selling of the 60 shares), do I have to wait more than 30 days before I sell the 10 shares bought on June 6th 2008 to avoid a wash rule. I believe someone said yes, and that is what I will do.

brucedoe
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Buying triggers wash sales. When you sell all of your holding in a stock and do not rebuy within 30 days after the ale, then there is no wash sale.

If you are planning on only selling the 10 shares bought on June 6, 2009 and not trigger a wash sale with the June 30th purchase, then you will need to wait the 30 days.
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