Is this a wash sale?

Discussion in 'Professional Trading' started by dawsonagh, Mar 22, 2011.

  1. dawsonagh


    I bought some stocks and get a loss for it,my CPA suggested me that I should not buy the same stocks within 30 day wash sale period, but I felt the stocks'promise is very bright, so I rebought the same stocks in my retirement account, would this be considered as a wash sale?
  2. morgen


    It would be a wash sale if the purchase is by an IRA (including a Roth IRA).
    When you calculate cost basis with wash sale adjustment, you need to combine all investments accounts owned or controlled by you, including your spouse¡¯s account or any corporate account you control.

    The wash sales rule also applies to short trade.

    We rephrase Wash Sale Rule in a easy understandable sentence. ¡°A Wash Sale occurs if you close an open position (An open position could be a long position or a short sale) of stock or securities at a loss and within 30 days, before or after the sale, you acquire an open position of substantially identical stock or security as a replacement in any associated account.¡±

    In certain circumstance, substantially identical stock or security could include but not limited to

    Same stock listed in different stock exchange
    Same stock with certain type of preferred shares
    Trades between stock and option with same underlying
    Trades between stock and future/warrants with same underlying
    Trades between certain type of call option and put option at different strike price etc.
    Trades between securities with same security type but different orientation(Long and Short should be treated differently)
    Trades between certain securities issued by same company

    The aboved is quoted from
  3. mickmak


    wash or not... if you buy it back in a seperate account, that's the best way going forward.

    In 2011, Brokers are required to report basis to IRS. Hence they will indicate wash sales for your purchases, etc.

    The best way to get around that is using multiple brokers. Management pain? yes.
  4. Probably something you know but no such thing as wash sale rule on futures and much better tax treatment.

    Just make sure you trade futures for the right reasons and not for wrong ones.

    Many traders trade futures because they lack sufficient capital so watch out for that.

  5. sprstpd


    So what happens in this situation if the IRA were a Roth IRA? The wash sale occurs in a normal account and the repurchase occurs in a Roth IRA. The wash sale loss is disallowed and the cost basis in the Roth IRA is adjusted upwards. However, since the Roth IRA has no tax consequences, you have effectively lost the ability to take this loss. Am I thinking about this correctly or is there something I am overlooking?