Stocks & bonds: ‘Substantially’ identical? — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily
Q. I’m having an argument with my broker. He says that buying bonds of one company after selling common stock of the same company triggers the wash-sale rule. I disagree. Who wins? D.T., Sparta, N.J.
A. You do. The wash-sale rule prevents you from claiming a loss on the sale of securities if you buy “substantially identical” securities within 30 days of the sale. Bonds or preferred stock of a corporation are not treated as substantially identical to the common stock of the same corporation.