Investing in stocks- who’s right?

[Michael Drew]

Can someone explain to me how to avoid round trip rules? I sold some stocks Feb 23rd that were down over 50%. I originally bought them with some faith in the company and they would grow - but they tanked. Figured I might as well sell them and take the tax loss, then reacquire after 30 days and hold them. But now I'm wondering if I can actually do as I had planned and sill claim the losses on my 2022 taxes? If I buy the same stocks again, say tomorrow, would those buys be considering "round trips", and ineligible for taxes losses?

[Jim Koepke]

Can someone explain to me how to avoid round trip rules? I sold some stocks Feb 23rd that were down over 50%. I originally bought them with some faith in the company and they would grow - but they tanked. Figured I might as well sell them and take the tax loss, then reacquire after 30 days and hold them. But now I'm wondering if I can actually do as I had planned and sill claim the losses on my 2022 taxes? If I buy the same stocks again, say tomorrow, would those buys be considering "round trips", and ineligible for taxes losses?

It sounds like what you are asking about is called a "wash sale."

The wash-sale rule is an Internal Revenue Service (IRS) regulation that prevents a taxpayer from taking a tax deduction for a security sold in a wash sale. The rule defines a wash sale as one that occurs when an individual sells or trades a security at a loss and, within 30 days before or after this sale, buys a "substantially identical" stock or security, or acquires a contract or option to do so.

You should talk to an accountant or your tax preparer before doing this.

Besides February 23rd to March 24th is not 30 days.

jtk

[Michael Drew]

It sounds like what you are asking about is called a "wash sale."



You should talk to an accountant or your tax preparer before doing this.

Besides February 23rd to March 24th is not 30 days.

jtk

Yes, Wash is what I'm trying to avoid. I was actually wondering if it's 30 days or one month. Good input on that clarification!

[Bill Dufour]

It is 30 days but.... that is 30 days on both sides so it may be 60 days.
I am not sure how they count days so you may need to wait 31 days to make sure.
Bill D

[Bill Dufour]

You also have to determine when the transactions are actually dated. If it is done online after 1:00 PM it will be done no sooner then the next market day. It can take several market days for stock transactions to actually be logged into the books.
I generally allow 3 market days for the transaction to clear and be reflected in my account. So If I sell some stock then transfer the cash into my bank account I allow six week days for it to get there and be available to spend.
Bill D.

[Jim Koepke]

It is 30 days but.... that is 30 days on both sides so it may be 60 days.
I am not sure how they count days so you may need to wait 31 days to make sure.
Bill D

You can not buy a stock that has dropped in price and then sell shares in the same entity that were previously owned within 30 days to claim a loss for taxes. Nor can shares be sold for a loss then rebought in less than 30 days.

There was no mention of business days or holidays and weekends not being counted. It also says 30 days, not one month.

It seems the idea is if the stock is only having a short term dip it should be held, not sold to create tax avoidance schemes.

Not being an accountant or a tax professional, my advice is to ask an accountant or a tax professional.

jtk