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wash sale confusion

OK, is there anything that causes more confusion (besides some of the depreciation conventions) than the wash sale rule?

Suppose I buy and sell XYZ on 4/1/13 for a $200 loss.

I now buy and sell the same stock on 4/10/13 for a $500 gain.

Now, the $200 loss is disallowed due to the wash sale rule.

But here's my confusion. I know I can recapture that loss.

If I do nothing with the stock for 30 days, is it automatically recaptured?

Or, let's say I again trade the stock on 4/20/13. If it's a gain do I recapture it? What if it's a loss?

Suppose instead I wait until May 2 (31 days after the original loss). Do I recapture it then? Or do I wait until May 11 (31 days after that gain)? Do I recapture it?

In short, how do I regain a wash sale loss incurred on 4/10 due to a loss on 4/1?

Mel

Reply to
MZB
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A snapshot at this moment. You are out of the stock. After 30 days of 'out' the wash is closed.

I suppose the right way to handle is to use the $200 loss to increase the 4/10 purchase cost basis, but either way, it's a net short term $300 gain.

Reply to
JoeTaxpayer

[...]

Yes, there are plenty of things. Your wash sale example is very straight-forward.

For confusion, try these:

Start with individual retirement plan contributions, distributions, conversions, recharacterizations, salary deferrals, profit-sharing contributions, rollovers, loans, excess accumulations, excess contributions, and so on.

Next, employer stock plans.

Then, like-kind exchanges.

Do we need more to make the point about confusion?

Reply to
Mark Bole

Due to the wash sale loss, the taxable gain is $300 (the $200 loss increases the basis of the 4/10/13 purchase).

If it's a loss, the wash sale rule again kicks in.

Seth

Reply to
Seth

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