Time to Cope With Wash Sale

As we all know, capital loss can be tax deductible, up to $3000. But wash sale is an exception.

What the hell is wash sale?

In general you have a wash sale if you sell stock at a loss, and buy substantially identical securities within 30 days before or after the sale.

What can we do to avoid wash sale?

Don’t buy any stocks back before/after selling them for losses. Instead, long some similar stocks as "replacement" stock. Thirty-one days later you can switch back to your original stock if that is your wish. But there's no guarantee that any two stocks will move in the same direction, or with the same magnitude.

 

Or

Simply totally close all wash sale positions by year end.

There's no risk-free way to get around the wash sale rule. But then again, continuing to hold a stock that has lost value isn't risk-free, either. In the end it's up to you to evaluate all the risks, and balance them against the benefit you'll receive if you can claim a deduction for your loss.

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The wash sale rule can apply even if you don't acquire stock. If you enter into a contract or option to acquire stock, that's enough to make the wash sale rule apply. Your sale of stock can also be a wash sale if, within the wash sale period, you sell a put option on the same stock that's "deep in the money." And you can have a wash sale from selling options at a loss, too. For more on this subject see Wash Sales and Options.

所有跟帖： 

• 谢谢游子。这里有两个例外，所以有点糊涂。 -$1- ♂ (165 bytes) () 12/19/2011 postreply 14:48:51

• no loss, no wash sale. for ISO -美西游子- ♀ (578 bytes) () 12/19/2011 postreply 14:58:16

• You get tax deduction anyway even it is a wash sale. -说事- ♂ (273 bytes) () 12/19/2011 postreply 16:25:19

• True. But you have to sell all lots by year end, and not to buy -易木- ♂ (0 bytes) () 12/19/2011 postreply 16:34:59

• right on! -美西游子- ♀ (0 bytes) () 12/19/2011 postreply 17:02:24

• if you read my post carefully.... -美西游子- ♀ (44 bytes) () 12/19/2011 postreply 17:02:06

• I remember that you can not buy back in 30 days after you sold a -易木- ♂ (0 bytes) () 12/19/2011 postreply 17:06:46

• right again! -美西游子- ♀ (0 bytes) () 12/19/2011 postreply 17:11:13