Will the following trigger the Wash Sale Rule ? First I sell all said stock for a loss. Then sell a (naked) put on same said stock at a strike price and duration TBD.

[irs-taxes]

The put is executed, meaning It was successfully sold. I'm now obligated to buy the stock, but don't buy it within the 30 day window. Will this trigger the Wash Sale Rule ?

[Critter-3]

Will this trigger the Wash Sale Rule ?  NO

[fanfare]

The good news is, you collected a Short Put premium.

The bad news is, the stock will probably continue to go down.

[irs-taxes]

Thanks for opining on the stock direction. However, my question is whether this will trigger the Wash Sale Rule ?

If the put is sold, yes I collected the put premium. Also if the stock is not put to me within the window of the 30 days then I've not purchased it. The question is whether selling the put on the stock I just took a loss on (same stock) triggers the WASH SALE RULE ?

[Rick19744]

As @Critter-3 indicated, possibly "no".

Having said that, we don't have sufficient details to be sure AND the rules in this area are murky.

I won't go into the wash sale rules, as I am sure you understand these or you wouldn't have asked the question.

You can turn a sale of stock into a wash sale by selling put options. This rule is not automatic. It applies only if the put option is deep in the money — and there’s no precise standard as to when a put option is deep enough in the money for the rule to apply. The rule applies if it appears, at the time you sell the put option, that there is no substantial likelihood it will expire unexercised. In this circumstance, selling the put option can be roughly equivalent to buying the stock.

So only you at this point, can determine the answer based on the above.

[irs-taxes]

I understand the matter is 'ambiguous'. The determination is made by the Brokerage Firm as reported on the 1099. Since the area is 'murky' how can it be that it is up to each individual brokerage house to make its' own determination? Do you have the IRS code number that speaks to this ?

Thanks.

[Mike9241]

maybe.

You can turn a sale of stock into a wash sale by selling put options. This rule is not automatic. It applies only if the put option is deep in the money — and there’s no precise standard as to when a put option is deep enough in the money for the rule to apply. The rule applies if it appears, at the time you sell the put option, that there is no substantial likelihood it will expire unexercised. In this circumstance, selling the put option can be roughly equivalent to buying the stock.

[tagteam]

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@irs-taxes wrote:

Do you have the IRS code number that speaks to this ?

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Revenue Ruling 85-87 (which basically states precisely what @Rick19744 and @Mike9241 stated in their answers).

[irs-taxes]

THANK YOU VERY MUCH.