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Find a silver lining in wash-sale rule

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in Small Business Tax

Q: You've explained the wash-sale rule in the past. But I bought a stock that I had sold at a loss less than 30 days earlier. I did so because it suddenly rebounded and I couldn't wait any longer. If I sell the stock again, but this time at a gain, is my basis adjusted for the prior loss? N.W., Deal, N.J.

A: Yes. The wash-sale rule says you can't deduct a stock-sale loss if you reacquire the same or a "substantially identical" stock within 30 days. The amount of the nondeductible loss would be added to your basis in the newer shares. For instance, say you took a $2,000 loss from a sale less than 30 days ago. If you buy back 1,000 shares of the same stock now at $10 a share and eventually sell it at $15 a share, your taxable gain will be limited to $3,000 ($5,000 minus the $2,000 of extra basis from the earlier disallowed loss).

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