Long shot: can any CPA explain wash sale rules?

[manly]

I understand what a wash sale is, but I don't see why it applies to my situation.

I have a short-term realized capital gain later followed by another short-term realized capital loss within 30 days.

IRS pub. 550 states that the loss in the second transaction cannot be deducted. However, the disallowed loss is added to the basis of the other (in this case, earlier) security. If that's the case, then there would then be a net realized loss for the earlier transaction. For the record, the number of shares is slightly different between the two discrete transactions.

So how do I report this on Schedule D? Can I ignore the wash sale rule?

 

[kermalou]

from what i understand, it gois something like this:

buy stock a, sell stock a for a loss, then buy stock a again ---> wash sale (if within 30/60 days)

 

[BrunoPuntzJones]

Nope that's right. You have to take it back to earlier purchases, even if it results in a loss. Can't ignore it Don't ask me to explain it, hell I barely know how it works.

The ones I have seen, and this sounds really dumb, are just added up. Take the ones you sold, add them up. Take the ones you bought, add them up. Figure out if you have a net gain or loss and that goes on the D. Just like normal That's just for the ones I have seen and there are situations where it would be different. You'll need to ask a real CPA (I just play one on TV) or maybe the member named CPA can help more.

 

[manly]

Originally posted by: kermalou
from what i understand, it gois something like this:

buy stock a, sell stock a for a loss, then buy stock a again ---> wash sale (if within 30/60 days)

I understand that, but I then closed out the second position, realizing a loss.

I realize the wash rule does apply, I just don't know how to report the numbers. For this example, it's convoluted that the loss is affected by an earlier position that was closed out.

 

[manly]

Frig, Intuit has this contradictory blurb in their FAQ:

What if I bought and sold stock more than once during the year?

If you bought and sold your stock more than once during the year you are still bound by the wash sale rules. However, if you completely close your position by the end of the year - and do not repurchase any additional shares - your last sale is not a wash sale.

I'm now inclined to believe the wash sale rule does NOT apply to my situation. :\

 

[kherman]

http://finance.yahoo.com has a sectiopn on taxes. Try there. If no luck there, just try google.

 

[manly]

Yeah I hit up Google last night, and this was perhaps the best reference on the wash sale rule:

http://www.fairmark.com/buystock/wash.htm

 

[LoverBoyJ]

Originally posted by: kermalou
from what i understand, it gois something like this:

buy stock a, sell stock a for a loss, then buy stock a again ---> wash sale (if within 30/60 days)

you need to add "the same stock".
In order to trigger wash sale, you buy a stock, sell the same stock at a lower price, then buy the same stock within the 30 day period. This you cannot use the loss to offset a capital gain.

 

[JoeBaD]

The wash sale rules only apply if you purchased shares of essentially the same stock within 30 days (either way) of a sale that generated a loss.

It is to prevent you from generating a tax loss and then reestablishing the same original position.

If, however, you sold the other shares at a gain and you have no other position in that stock I would ignore the wash sale rule. The net outcome would be the same