Calendar days or business days? The last business day of 2021 was on a Friday, which was the 31 st. of Dec.
30 business days later would have been Feb 14th 2022? Does that help?
Wash sale loss disallowed.... skip December?
- Thread starter KCalhoun
- Start date
Calendar days or business days? The last business day of 2021 was on a Friday, which was the 31 st. of Dec.
30 business days later would have been Feb 14th 2022? Does that help?
My first buy of that equity was on February 15th 2022. And it goes by CALENDAR days not business days.
I sold it on December 3rd 2021, welllll past the 30 days!!
It appears it is a 30 day window before or after the sale. You may check the prior 30 days for a similar stock purchase.
https://www.fidelity.com/learning-center/personal-finance/wash-sales-rules-tax
What is the wash-sale rule?
When you sell an investment that has lost money in a taxable account, you can get a tax benefit. The wash-sale rule keeps investors from selling at a loss, buying the same (or "substantially identical") investment back within a 61-day window, and claiming the tax benefit. It applies to most of the investments you could hold in a typical brokerage account or IRA, including stocks, bonds, mutual funds, exchange-traded funds (ETFs), and options.
More specifically, the wash-sale rule states that the tax loss will be disallowed if you buy the same security, a contract or option to buy the security, or a "substantially identical" security, within 30 days before or after the date you sold the loss-generating investment (it's a 61-day window).
It's important to note that you cannot get around the wash-sale rule by selling an investment at a loss in a taxable account, and then buying it back in a tax-advantaged account. Also, the IRS has stated it believes a stock sold by one spouse at a loss and purchased within the restricted time period by the other spouse is a wash sale. Check with your tax advisor regarding your personal situation.
How to avoid a wash sale
One way to avoid a wash sale on an individual stock, while still maintaining your exposure to the industry of the stock you sold at a loss, would be to consider substituting a mutual fund or an exchange-traded fund (ETF) that targets the same industry.
ETFs can be particularly helpful in avoiding the wash-sale rule when selling a stock at a loss. Unlike the ETFs that focus on broad-market indexes, like the S&P 500, some ETFs focus on a particular industry, sector, or other narrow group of stocks. These ETFs can provide a handy way to regain exposure to the industry or sector of a stock you sold, but they generally hold enough securities that they pass the test of being not substantially identical to any individual stock.
Swapping an ETF for another ETF, or a mutual fund for a mutual fund, or even an ETF for a mutual fund, can be a bit more tricky due to the substantially identical security rule. There are no clear guidelines on what constitutes a substantially identical security. The IRS determines if your transactions violate the wash-sale rule. If that does happen, you may end up paying more taxes for the year than you anticipated. So when in doubt, consult with a tax professional.
What is the wash-sale penalty?
If the IRS determines that your transaction was a wash sale, what happens?
You can't use the loss on the sale to offset gains or reduce taxable income. But, your loss is added to the cost basis of the new investment. The holding period of the investment you sold is also added to the holding period of the new investment. In the long run, there may be an upside to a higher cost basis—you may be able to realize a bigger loss when you sell your new investment or, if it goes up and you sell, you may owe less on the gain. The longer holding period may help you qualify for the long-term capital gains tax rate rather than the higher short-term rate.
That can be the silver lining—but in the short term you won't be able to use the loss to offset a realized gain or reduce your taxable income. Getting a letter from the IRS saying a loss is disallowed is never good so it's best to err on the side of caution. If you're concerned about a buying a potential replacement investment, consider waiting until 30 days have passed since the sale date. Or work with a financial professional who should be able to confidently navigate the ins and outs of taxes and your investments.
See IRS publication 550.
https://www.fidelity.com/learning-center/personal-finance/wash-sales-rules-tax
What is the wash-sale rule?
When you sell an investment that has lost money in a taxable account, you can get a tax benefit. The wash-sale rule keeps investors from selling at a loss, buying the same (or "substantially identical") investment back within a 61-day window, and claiming the tax benefit. It applies to most of the investments you could hold in a typical brokerage account or IRA, including stocks, bonds, mutual funds, exchange-traded funds (ETFs), and options.
More specifically, the wash-sale rule states that the tax loss will be disallowed if you buy the same security, a contract or option to buy the security, or a "substantially identical" security, within 30 days before or after the date you sold the loss-generating investment (it's a 61-day window).
It's important to note that you cannot get around the wash-sale rule by selling an investment at a loss in a taxable account, and then buying it back in a tax-advantaged account. Also, the IRS has stated it believes a stock sold by one spouse at a loss and purchased within the restricted time period by the other spouse is a wash sale. Check with your tax advisor regarding your personal situation.
How to avoid a wash sale
One way to avoid a wash sale on an individual stock, while still maintaining your exposure to the industry of the stock you sold at a loss, would be to consider substituting a mutual fund or an exchange-traded fund (ETF) that targets the same industry.
ETFs can be particularly helpful in avoiding the wash-sale rule when selling a stock at a loss. Unlike the ETFs that focus on broad-market indexes, like the S&P 500, some ETFs focus on a particular industry, sector, or other narrow group of stocks. These ETFs can provide a handy way to regain exposure to the industry or sector of a stock you sold, but they generally hold enough securities that they pass the test of being not substantially identical to any individual stock.
Swapping an ETF for another ETF, or a mutual fund for a mutual fund, or even an ETF for a mutual fund, can be a bit more tricky due to the substantially identical security rule. There are no clear guidelines on what constitutes a substantially identical security. The IRS determines if your transactions violate the wash-sale rule. If that does happen, you may end up paying more taxes for the year than you anticipated. So when in doubt, consult with a tax professional.
What is the wash-sale penalty?
If the IRS determines that your transaction was a wash sale, what happens?
You can't use the loss on the sale to offset gains or reduce taxable income. But, your loss is added to the cost basis of the new investment. The holding period of the investment you sold is also added to the holding period of the new investment. In the long run, there may be an upside to a higher cost basis—you may be able to realize a bigger loss when you sell your new investment or, if it goes up and you sell, you may owe less on the gain. The longer holding period may help you qualify for the long-term capital gains tax rate rather than the higher short-term rate.
That can be the silver lining—but in the short term you won't be able to use the loss to offset a realized gain or reduce your taxable income. Getting a letter from the IRS saying a loss is disallowed is never good so it's best to err on the side of caution. If you're concerned about a buying a potential replacement investment, consider waiting until 30 days have passed since the sale date. Or work with a financial professional who should be able to confidently navigate the ins and outs of taxes and your investments.
See IRS publication 550.
Then call the IRS on the phone and ask them, since it is their rule.
I did NOT but the stock 30 days before and when I Sold it in December I did NOT buy it back until Feb 15th 2022.
I have read that wash sale rule plenty of times and as you can see it says this
1. WHAT IS A WASH SALE....
2. HOW TO AVOID A WASH SALE....THAT ONLY SAYS BUY SOMETHING SIMILAR, again worthless information
3. WHAT IS A WASH SALE PENALTY
again worthless information
They need a clear answer on how to have wash sale disallowed losses become actual Losses and no where in that article does it provide any of that that specific detail!!!!!
Rightttttttt
Try calling them. Half the time you can't get through, if you do the wait time is more than an hour and ifffff you get someone who hasn't a clue about wash sales, well they send you off to someone who might and that's another long day on hold..
The wash sale is there for people to pay taxes on fake gains.
Look at your subsequent trading and see if anything could have triggered the "substantially identical" test. When I worked on that side of the business many violations were done by accounts that were confident they wouldn't figure it out. Now almost every broker does it off of a vendor database.
What I meant is if you sell the shares now and haven't bought shares in that symbol 30 days before the sale and don't buy shares in the same symbol for 30 days, then the loss from the wash sale would be realized for 2022.
It's also possible the wash sale was for selling sometime earlier in the year, and the broker already added that to the basis and accounted for that when you sold this past December (i.e., the 1099 could be correct but confusing).
Yes I did buy and sell it in the beginning of 2021 and yes did have wash sales on it that were Disallowed at that time but from everty angle I have covered about wash sales being disallowed that once the stock is sold prior to the next calendar year all wash sale disallowed become allowed.
Your first part I do not understand. How could I have sold the shares now, if I had already sold them in December 2021???