"There are other outlying circumstances that can trigger the wash sale rule. If a spouse or corporation under the investor's control purchases a substantially identical security during the 30 days before or after the sale that can trigger the wash sale." It was not clear to me…
Read the full replyMy wife and I have individual accounts with the same brokerage. We each have many of the same holdings. I would like to transfer stuff around so only one of us has a particular item.
My understanding is that this doesn't get reported anywhere, as we are married and can freely transfer money. Is that correct? It is not terribly important, so if there are any potential problems, I don't have to do it. It would just be more orderly.
Thanks
"There are other outlying circumstances that can trigger the wash sale rule. If a spouse or corporation under the investor's control purchases a substantially identical security during the 30 days before or after the sale that can trigger the wash sale."
It was not clear to me whether that applies always, or only if you and your spouse file a joint return. However, Pub 550 says unequivocally:
"If you sell stock and your spouse or a corporation you control buys substantially identical stock, you also have a wash sale."
It says elsewhere that the wash sale rule applies to all of your holdings, whether in the same or in different brokerages. It also applies when purchases are made in an IRA (Roth or Traditional) and sale at a loss happens in a non-IRA account.
Transfers between spouses do not affect basis, are not reported anywhere. No objection to simplifying your accounting, but it doesn't affect your taxes.
-- Arthur Rubin, Brea, CA
Does this apply only if they do a direct transfer of the shares between the accounts? What if hubby sells his shares and wife buys her shares on the same day? This will probably change the basis because the bid and ask prices are generally not the same (so they'll lose the difference between them), and there may also be transaction costs.
And if the sell part of that is at a loss, it will trigger the wash sale rules, even if the buy is in an IRA, which would normally not have to worry about basis and taxes.
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