wash sale

I need to determine if the following 2007 transactions are considered wash sales:

(11/01 Bought 755 sh HOV for $8186)

11/09 Sold 755 sh HOV for $6649

(11/20 Bought 750 sh HOV for $6347)

11/21 Sold 750 sh HOV for $5600

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Reply to
tj88
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Did you buy any back before 12/21? If not, you have no wash sale, you sold both sets of shares you bought. JOE

Reply to
joetaxpayer

True, but does he have to report the wash sale regardless? Would the IRS software would flag his return for manual analysis if he did not?

On my return I would probably write "755 HOV (wash)" and take the loss for only 5 shares (or maybe zero gain/loss for simplicity), but the disallowed loss is carried over and added to the cost basis of the second transaction which is "750 HOV (has wash carryover)" meaning that the cost basis of the 750 HOV is something like

6347+(8186-6649)x84.
Reply to
removeps-groups

This makes 750 shares of the 11/9 sale a wash sale.

So, the 11/9 sale is the only wash sale. The loss on 750 of those shares is deferred and added to the basis of the 11/20 purchase.

Now, if after the 11/21 sale you stayed out of the stock for over 30 days (and then didn't do any wash sales in the closing days of December), you can in effect ignore the wash sale rule and report the transactions "normally". This is technically wrong, but will give the same gain/loss/total tax bottom line as doing it correctly.

-- Rich Carreiro snipped-for-privacy@rlcarr.com

Reply to
Rich Carreiro

the transactions "normally".

Submitting a false return is a crime even if it does not result in tax deficiency.

Reply to
s_pickle2001

That may be true in theory, but in practice there are certain times logic prevails. I will admit I once had a few shares from a spin-off of a company. When I went to sell those shares, I lied. I claimed they had zero basis. It was fraud, and I knew it. In an audit, if they asked how I had the never to do such a thing, I was ready to state that the choice to pay tax on the whole $20 those 4 shares were worth made more sense than to spend even an hour (which I had already wasted) trying to come up with the true higher basis. Criminal or not, I slept soundly after filing that return, and the perhaps $2 extra was money well spent.

(Of course there are times not to do such things, but the OP's situation and mine were not 'frivolous' positions to take. There are times that a return is simple except for some nominal amount that requires reporting. One can have the choice between hiring a $500 professional to disposition that $100, or to assign it a place in the return where it's subject to the highest rate, ordinary income, and not worry about going to jail.)

JOE

Reply to
joetaxpayer

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