To calculate the total tax basis in shares held after the wash sale
, students must calculate the adjusted basis for the repurchased shares as well as the basis in any shares remaining from the initial holdings.
You won't have a wash sale
, so the capital loss will be effective.
The (https://www.marketwatch.com/story/understanding-the-wash-sale-rules-2015-03-02) wash sale
rule kicks in if an investor repurchases the same or a substantially identical investment within 30 days before or 30 days after selling the original investment at a loss.
Generally, a "wash sale
" occurs when a taxpayer sells or otherwise disposes or stock or securities at a loss and buys back or otherwise acquires substantially identical stock or securities within 30 days before or alter the sale.
Part I of this Note will provide an introductory explanation of tax loss harvesting, followed by an introductory explanation of the Wash Sale
Rule in Part II.
Rule: If you sell a stock or bond and then buy it (or something very similar) back within 30 days, IRS may take away any tax deduction you attempt to take: the "wash sale
If the client follows a "buy-and-hold" strategy--which is consistent with the professional money manager's belief in not selling during market downturns--the goal is to sell these shares without triggering the IRC section 1091 wash sale
When a loss from a wash sale
is disallowed, the deferred loss is added to the basis of the newly purchased securities.
Because of automatic reinvestment, it is possible that a sale of fund shares at a loss can result in an unintended wash sale
There are several ways to avoid a wash sale
. One is to immediately invest in something different from the security you sold.
A taxpayer can use a wash sale
to generate long-term capital gain treatment should the stock increase in value.