Re:Subject: Wash sale

From: "Steve Foulks" <steve_foulks@up.bresnan.net>
Subject: Re:Subject: Wash sale
Date: Tue, 19 Jan 1999 11:18:34 -0500

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>From: SMabel555@aol.com
>Subject: Wash sale
>
>I bought 100 shares of  a stock 3 years ago for $4.>
>
>It was recently trading as low as $0.25.    I bought another 400 shares.
>
>What is the impact / meaning of a wash sale?  As I interpret it, if I sell
the
>400 shares for $1 (profit =300 - commissions), then sell the 100 shares at
>$1 (loss =300), I DO NOT GET TO CLAIM THE LOSS for tax purposes.
>
>Is this correct?  Are there any other impacts?  Would it matter if the loss
&
>gain  did not exactly cancel each other out?

A wash sale occurs when you sell stock at a "loss" and with 30 days of the
sale date (either before or after) you buy similar stock, and continue to
hold this stock after selling the wash sale.  You can't deduct the loss,
instead you add the loss to the remaining shares in that company.  When you
sell the remaining shares in that company you will recognize the former
loss.

You don't have a wash sale since you first sell your profitable shares and
then sell your loss shares, while not retaining a position.  The easiest
solution to avoid the wash sale rules is to make sure you violate the 30 day
rule.

Steven M. Foulks, CPA, CFP, PhD       
http://www-instruct.nmu.edu/business/sfoulks/
or http://hitchhiker.nmu.edu/Foulks/

email: steve_foulks@up.bresnan.net <mailto:steve_foulks@up.bresnan.net>



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