Wash sale rule: The before and after — 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+

Wash sale rule: The before and after

Get PDF file

by on
in Small Business Tax

Q. I sold stock at a loss on Jan. 11. My broker says the wash sale rule applies because I had purchased more shares of the same stock two days before. Is this true? D.L., Colts Neck, NJ

A.  Yes. The wash sale rule prevents you from deducting a loss on the sale of securities if you buy substantially identical securities within 30 days of the sale. This applies to sales both before and after the sale. Thus, the rule effectively applies to a 61-day period comprised of the 30 days before the sale, the actual day of the sale and the 30 days afterward.

Tip: Add the nondeductible loss to your basis in the new stock. This will reduce any future taxable gain or increase the deductible loss.

Related Articles...

Leave a Comment

Previous post:

Next post: