Does Wash Sale apply to ESPP holdings?

My wife has participated in her employer's Employee Stock Purchase Plan (ESPP). The company is a publically traded company, and the discount offered is 15%. Recently, she sold some of the stocks from her ESPP holdings. The acquisition date of these holdings varied from

5 years ago to 6 months ago. Overall, there was a small amount of loss (3K), and about $1500 of compensation income (bargain element on the disqualifying disposition portion). We do not hold this stock in any other investment vehicle. She continues to participate in the ESPP, and early next week, she will get some more stocks in the plan (using the contributions from the previous six months). This purchase would be only about 15 days after the sale date. So, does this make our previous sale a wash sale? If so, how do I handle it? Does this mean that ESPP sales (at a loss) can only be done in the middle 4 months of the 6 month period? (since there is a purchase once every 6 months). Bhoot

> > > > > > >
Reply to
deja_bhoot2000
Loading thread data ...

You got it right. ESPP sales at a loss need to be timed to avoid the wash sale. She should have sold 31 days before the new purchase or 31 days after. The disqualified loss is added to the basis of the replacement shares. JOE

Reply to
joetaxpayer

BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.