Harvesting capital loss for taxes

In my opinion, an IRA is not the best vehicle for speculative investments, as you are unable to claim your losses.

The wash sale rule is something of a paper tiger. If held outside of a retirement account, the loss is added to the basis of the new shares--you might be delayed in taking it, but it isn't gone.

I asked this same question some time back. The consensus response seemed to be that it was still self-dealing, that the loss would be lost completely as it's washed from the post-tax account and the IRA has no basis to drop by the washed loss. In practice, it would take an audit to catch this, but I decided long ago to keep my returns bullet proof. Receipts for the rental property's expenses, and notes documenting the use. Proper receipts from charities for checks sent, and pictures of donated items. Not worth the risk.

JOE

How can't you claim your losses? Since your basis is zero, they're netted out against gains when you start making withdrawals. In a sense, you've already claimed the whole IRA as a loss by deducting the contributions.

A more serious argument against speculating in an IRA is that you're playing with the money you're presumably planning to live on after you retire.

I have no idea wat you are trying to say, but it makes no sense.

An IRA converts capital gains into deferred ordinary income.

It makes no difference what you "rebuy" into. The loss is taken against the "Selling" account (a taxable account, in this instance). I think the general consensus is that changing account types (and even differing, but highly similar investments) don't stand as exemptions to the wash sale rule.

Sorry.

Your basis in a retirement account (if any) is the after-tax/ nondeductible portion, and if the overall value declines below that, it is possible to claim a loss on a Schedule A (after 100% has been distributed).

bullet point "Buy substantially identical stock or securities". However, the disallowed loss is carried over to the new shares that you bought, so that when you finally sell you reduce your profits by the disallowed loss. But in the Roth IRA there are no taxes anyway. If you bought at $100, sold at $80, then have the chance to buy back at $70 and you think the stock will only go up from here, then buy it back in the taxable account at $70. Sure, you don't get the loss of $20 now, but you will when you finally sell at $120 :).