Year-end ’08 personal tax strategy: Skirt the wash-sale rule — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily
  • LinkedIn
  • YouTube
  • Twitter
  • Facebook
  • Google+

Year-end ’08 personal tax strategy: Skirt the wash-sale rule

Get PDF file

by on
in Small Business Tax

You might choose to realize a loss at year-end to offset capital gains from earlier this year. But you might not want to sell a stock if you’re convinced that it’s poised for a rebound.

Strategy: Preserve your tax loss with careful timing. Specifically, don’t trigger the wash-sale rule if you intend to buy back the same stock.

The wash-sale rule prevents you from claiming a loss if you acquire “substantially identical” securities within 30 days before or after selling the stock. The loss then is added to the new stock’s basis.

You can avoid the wash-sale rule by waiting at least 31 days before buying back the same stock. Alternatively, you might decide to “double up” on your investment. How it works: Keep the stock and buy more shares of the same stock now. Then wait at least 31 days to sell the original block of shares. Thus, you’ll acquire new shares at the current low price while you preserve the tax loss from selling the old shares.

Tip: If you use the double-up strategy, take action before Dec. 1. To deduct the loss from selling the old shares, the sale date must be at least 31 days after you buy the new shares.

Related Articles...

Leave a Comment

Previous post:

Next post: