Yes, you can reset just as you described: sell completely, and then repurchase. You can do the sale / repurchase within the calendar year (rather than waiting for Dec/Jan), though you may have to request that the K-1 preparer send you 2 K-1s: one for the time leading to the complete disposition, and another starting with the repurchase.
As for how long you need to be out, resetting your capital account is different than avoiding a wash sale. To reset the account, I suspect it might require just a day, but its probably best to ask the K-1 preparer since their computer systems need to be able to issue two different K-1s.
If you also want to avoid the basis accounting required for a wash sale:
- If you have an overall gain on the sale, wash rules don't apply (they only apply to losses).
- If you have an overall loss, you have to wait 31 days
- And as the link above discusses, if you have Ordinary Gain and a Capital Loss netting to a positive number wash sale might not apply (the author of that answer is confident, but since Ordinary Gain can also be an offset to suspended passive losses, and the thread didn't discuss how the suspended losses figure in to the gain/loss calculation, I'm not sure what the treatment is without getting a tax professional involved).
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**Note also, I'm not a Tax Preparer/CPA. Just a volunteer, seasoned, TurboTax user.
Use any advice accordingly!
