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Wash-sale rule only affects buyback

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in Small Business Tax

Q: I bought Intel shares at different times and prices during the past few years. At the end of February and the first few weeks in March, I sold all those shares (and incurred some losses). All the stock sales occurred within 30 days. Can I still claim the losses? Norristown, Pa.

A: Yes. It appears you're worried about the wash-sale rule. But that rule prohibits you from claiming tax losses only if you buy back the same or similar replacement securities within 30 days of the sale. In this case, you haven't bought any stock. In fact, you completely divested yourself of all Intel stock, so the wash-sale rule doesn't apply. That means you can deduct all your losses for those transactions. Tip: Use capital losses first to offset capital gains. Then you can use any excess loss in 2005 to offset up to $3,000 of ordinary income. You can carry over losses above that amount into 2006.

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