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Wash Sale rules
Posted on 1/10/25 at 8:03 am
Posted on 1/10/25 at 8:03 am
Question about wash sales as I want to capture a loss for a stock, but not at the cost of a wash sale.
Suppose I own 100 shares of a stock. I've acquired these shares over a period of 1.5 years or so. Of these shares, I've purchased 25 within the last 30 days. Can I sell 75 shares now and get credit for a loss and not trigger wash sale for the 25 I've purchased within the last 30 days?
Suppose I own 100 shares of a stock. I've acquired these shares over a period of 1.5 years or so. Of these shares, I've purchased 25 within the last 30 days. Can I sell 75 shares now and get credit for a loss and not trigger wash sale for the 25 I've purchased within the last 30 days?
4
Posted on 1/10/25 at 8:07 am to Victor R Franko
You guys really need to start deferring to ChatGPT for this kind of stuff. It is 10x better than any answer you will get on a message board.
Here is what chatgpt says.
Yes, you can sell 75 shares now and claim a loss on them without triggering a wash sale for the 25 shares you purchased within the last 30 days, provided you follow the rules correctly. Here’s how the wash sale rule applies:
Key Points to Consider:
1. Wash Sale Rule: A wash sale occurs when you sell a stock at a loss and then repurchase the same (or substantially identical) stock within 30 days before or after the sale.
2. Specific Identification Method: If you specifically identify the 75 shares you are selling (and they are not among the 25 shares purchased in the last 30 days), the wash sale rule will not apply to those shares. You must ensure that your broker allows you to specify which shares are being sold (FIFO, LIFO, or specific identification).
3. Effect of the Rule on Remaining Shares:
• If the 25 shares you purchased within the last 30 days are not sold, they will not be affected by the sale, as long as you don’t buy additional shares that could complicate the situation.
• Ensure that no purchase of substantially identical securities happens within 30 days of the sale to avoid wash sale implications.
4. Documentation: Clearly document the shares being sold and specify which shares the sale applies to. If you’re using specific identification, inform your broker before selling.
By selling the 75 shares and not repurchasing substantially identical securities within 30 days, you can claim the loss on those shares without triggering the wash sale rule for the 25 shares purchased recently. Always verify with your tax advisor or financial professional to ensure compliance.
Here is what chatgpt says.
Yes, you can sell 75 shares now and claim a loss on them without triggering a wash sale for the 25 shares you purchased within the last 30 days, provided you follow the rules correctly. Here’s how the wash sale rule applies:
Key Points to Consider:
1. Wash Sale Rule: A wash sale occurs when you sell a stock at a loss and then repurchase the same (or substantially identical) stock within 30 days before or after the sale.
2. Specific Identification Method: If you specifically identify the 75 shares you are selling (and they are not among the 25 shares purchased in the last 30 days), the wash sale rule will not apply to those shares. You must ensure that your broker allows you to specify which shares are being sold (FIFO, LIFO, or specific identification).
3. Effect of the Rule on Remaining Shares:
• If the 25 shares you purchased within the last 30 days are not sold, they will not be affected by the sale, as long as you don’t buy additional shares that could complicate the situation.
• Ensure that no purchase of substantially identical securities happens within 30 days of the sale to avoid wash sale implications.
4. Documentation: Clearly document the shares being sold and specify which shares the sale applies to. If you’re using specific identification, inform your broker before selling.
By selling the 75 shares and not repurchasing substantially identical securities within 30 days, you can claim the loss on those shares without triggering the wash sale rule for the 25 shares purchased recently. Always verify with your tax advisor or financial professional to ensure compliance.
Posted on 1/10/25 at 8:13 am to I Love Bama
Thanks for this information! You're correct about using ChatGPT. I'm an old and learning new tricks is sometimes hard on an old dog, but I think I can apply myself to this one. I can back check whatever ChatGPT provides and probably learn more on the subject. Thanks again.
Edit: It's not really hard to learn, Just that I'm tired of searching for the cheese, does that make sense?
Edit: It's not really hard to learn, Just that I'm tired of searching for the cheese, does that make sense?
This post was edited on 1/10/25 at 8:14 am
Posted on 1/10/25 at 8:15 am to Victor R Franko
No worries. Yeah it has been a struggle to get my dad to start using it as well.
Not a good as professional advice (yet) but 100x better than a message board.
Not a good as professional advice (yet) but 100x better than a message board.
Posted on 1/10/25 at 8:43 am to Victor R Franko
You're fine. Just select FIFO (first in first out) on your sell order.
Posted on 1/10/25 at 5:46 pm to Victor R Franko
Change your accounting method writing a letter...mark to market....then Form 3115 as I remember
Posted on 1/10/25 at 8:20 pm to I Love Bama
ChatGPT is pretty reliable however doesn’t hurt to fact check independently
Posted on 1/10/25 at 11:25 pm to I Love Bama
quote:
You guys really need to start deferring to ChatGPT for this kind of stuff. It is 10x better than any answer you will get on a message board
Does ChatGPT tell you what source docs it used for the answer?
Because this answer is not supported by IRS code or regulations.
There is NO exception in code or regulations for using specific identification. There are NO cases to support this.
There are a few people on the internets who believe that specific identifcation of stock somehow is an exception to the substantially identical rules... but again... this is not supported by the IRS. And even the people in the deep internet who espouse this theory will tell you that the broker will still flag it as a wash sale, and report it to the iRS as a wash sale, so then you get the burden of trying to convince the IRS that the broker is wrong. Good luck.
Posted on 1/11/25 at 7:29 am to Victor R Franko
It’s only a wash sale if you buy it back after selling
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