sell at a loss before new year?

[Gohard777]

Should I, can I sell my stock at a loss before the new year, then claim loss on taxes, then repurchase same stock after the new year at same price? Seems like you can claim loss on taxes and repurchase and own same amount of shares at a lower price so you still have same number of shares. Is this possible or true?

[M-MTax · Accepted solution]

Yes, but you have to be mindful of the wash sale rule:

https://turbotax.intuit.com/tax-tips/investments-and-taxes/wash-sale-rule-what-is-it-how-does-it-wor...

Your loss is disallowed for tax purposes if you sell stock or other securities at a loss and then buy substantially identical stock or securities within 30 days before or 30 days after the sale.

[Opus 17 · Accepted solution]

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@M-MTax wrote:

Yes, but you have to be mindful of the wash sale rule:

https://turbotax.intuit.com/tax-tips/investments-and-taxes/wash-sale-rule-what-is-it-how-does-it-wor...

Your loss is disallowed for tax purposes if you sell stock or other securities at a loss and then buy substantially identical stock or securities within 30 days before or 30 days after the sale.

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The wash rule applies even if the sale and repurchase happen in different calendar years (straddling the New Year).   It's 31 days or more no matter what.  

[M-MTax]

If you're buying after a loss, it's 31 days after the sale (that produced a loss) to repurchase.

Do you know if you include the date of the sale or if the start date is the day after the sale? That really isn't precisely specified anywhere in the Code or Regs that I can find (just not within "30 days"), but I include the day of the sale and every other example and hypo seems to do the same. 

[Opus 17]

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@M-MTax wrote:

If you're buying after a loss, it's 31 days after the sale (that produced a loss) to repurchase.

Do you know if you include the date of the sale or if the start date is the day after the sale? That really isn't precisely specified anywhere in the Code or Regs that I can find (just not within "30 days"), but I include the day of the sale and every other example and hypo seems to do the same. 

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The code says:

"In the case of any loss claimed to have been sustained from any sale or other disposition of shares of stock or securities where it appears that, within a period beginning 30 days before the date of such sale or disposition and ending 30 days after such date..."

"ending 30 days after such date" would mean that the date of the sale is day zero.  Then you count 30 days from the date of the sale.  That's the blackout period.  31 days after the date of the sale (not counting the date of the sale) is when it is allowed to buy again.  

So in effect, the entire black out period is 61 days; 30 days before, then the day of, then 30 days after.  

[M-MTax]

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@Opus 17 wrote:
31 days after the date of the sale (not counting the date of the sale) is when it is allowed to buy again.  

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Exactly.  Then, if you do the simple math for this hypo, if you sell on the 1st of a month that has 31 days, you cannot repurchase until the 1st of the following month. In that case you don't count the date of the sale OR the last day of the stated period (which would be the 31st of the month of the sale).

[Gohard777]

Thank you

[Gohard777]

Thank you