Yet another wash sale query

I guess this brings up a related query:

If I sell my IRA shares today, does that remove the wash sale situation?

Mel

Not sure about this one. I'll leave it to the experts.

That would not be a wash sale as long as you waited an additional 30 days past

3/29 to buy any more shares in XYZ.

If you sold all of your shares in XYZ no matter where held and then did not buy any more until more than 30 days later, you would not have a wash sale.

Are you asking if you only sold the IRA shares? That won't generate a tax loss.

You are correct in that the wash sale rules are complicated. And even more so when you mix transactions in taxable and tax-deferred or tax-free accounts.

Personally, I avoid doing anything to trigger the wash sale rules as I think the hassle is not worth the effort. Certainly not for the sums I have to invest.

Where I find this most difficult is with bond mutual funds. They often pay monthly dividends, and if you automatically reinvest them, you can end up with a wash sale. I've gone so far as to have more than one similar sort of bond fund so I can more easily just sell the entire position of just one of them if I want to move money around. (Speaking of perverse tax incentives.)

In any case, by the time you get a good set of answers to your question it may be a moot point. Unless this is a substantial transaction, I would suggest either waiting out the 30 days or selling all of the shares and then waiting

30 days to re-buy. I assume you still like the long-term prospects of XYZ. In that case, you may just want to forgo harvesting a temporary dip in the price. Unless this is somehow a substantial enough write-off to be worth the extra steps.

I think I've sometimes seen people express the opinion that two different index funds that track the same index are "substantially the same" and would trigger wash sales between them.

This seems like a stretch to me, but I'm not sure what the IRS opinion is.

This doesn't seem to answer my question. Anyone???

My latest thinking is that if I take the loss on say 3/29,then there is no wash sale. Can anyone confirm this?

Mel

Mel

2/23 Buy 3/18 Sell

The clock starts. You must not buy for 30 days. On day 31, there is no wash sale. Until then, there is a potential wash sale, but of course, that's the case any time you sell at a loss.

Why did I ignore the IRA? Because those were not "replacement shares", they were in the account at the same time the taxable acct shares were purchases.

Looking forward, keep in mind, it's best to avoid mixing same stock purchases among taxable and non-taxable accounts. An IRA purchase that washes the loss in a taxable account causes you to lose that tax loss for good.

The clock goes backward and forward. Shares purchased within 30 days in either direction are considered replacement shares.

This is to prevent you from getting around the wash sale rule simply by buying the replacement shares the day before you sell instead of the day after.

Barry:

That's why I will wait until about 3/29 or so. I assume that establishes the loss date. Since no shares were purchased 30 days BEFORE I take the LOSS, I am home free, assuming I do not re-buy the shares within the NEXT 30 days.

Can you confirm my thinking here?

Mel

Apologies, Barry is 100% correct. Disregard my incorrect note. As Barry corrected, the 30 days is +/- and the other shares wash the sale if purchased within 'prior' 30 days as well.