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Buy back stock after gift to charity

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in Small Business Tax,Small Business Tax Deduction Strategies

Q. I donated appreciated stock to charity, and I want to reacquire more shares of the same stock. Does this violate the wash sale rule? J.D.T., Yardley, Pa.

A. No. The wash sale rule prohibits you from deducting a loss on the disposition of securities if you reacquire substantial identical securities within 30 days. But this prohibition doesn’t apply in this situation.

Accordingly, you can claim a charitable deduction based on the stock’s fair market value if you’ve held it longer than one year. When you reacquire the stock, your basis for the new shares will equal your cost to acquire them.

Tip: If you then sell the stock at a gain, the gain will be less than it would have been for the original shares.

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