Taxpayer sells shares of mutual fund in taxable account on 1/5/09 and incurs a loss. He purchases shares of the same fund in his Roth IRA on the same day. Does the fact that one account is taxable and the other is an IRA in any way negate the wash sale rule? If not, is there any way to rectify the error so that he can still claim the loss?
Wash sale - taxable acct. to Roth?
Feb 21, 2009
6 Replies
No. In fact it's even worse. The official IRS position is that in a case like this the loss is not only disallowed, but is forfeited (unlike in a normal wash sale where the disallowed loss is added to the basis of the "replacement" shares).
-- Rich Carreiro snipped-for-privacy@rlcarr.com
I agree with Rick. See also Publication 550 about sales by Related Partices and these ARE related parties.
ed
Sell the shares of that fund in the Roth, and stay out of the fund for 31 days. You could even immediately buy into a similar fund with the proceeds. That should functionally remove any problem.
Would that solution allow taxpayer to claim the loss, then?
Indisputably. That is to say, that while opinions vary, I think everyone will agree on that.
Could anyone else confirm this? I'm not able to find anything on the IRS website or in their publications that supports this statement.
It seems to me that the purchase of the shares for the IRA automatically triggers the wash sale, even if he subsequently sells them and doesn't repurchase them for 31 days, or buys shares of a different fund.
Join the Discussion
Have something to add? Share your thoughts — no account required.
Didn't find your answer?
Ask the community — no account required