Wash Sale Question

[JJ1847]

Hi Folks,

Would you be able to tell me if the following would be considered a loss that could be written off against 2022 gains or if it would be considered a wash sale that would have to be pushed to tax year 2023?

100 shares stock xyz purchased at $10 on 07-01-22 total cost $1000

100 shares stock xyz purchased at $ 8 on 11-21-22 total cost $ 800

If 50 shares of stock xyz (of the 200 total shares) were sold at $7/shr (using highest cost per share accounting) for a loss on 12-26-22 and no additional purchases or sales were made in this stock until after 02-01-2023...would the tax loss sale be eligible to use against 2022 gains or would it be considered a wash sale and pushed to tax year 2023?

Thanks for your kind assistance!

[Anonymous_ · Accepted solution]

The sale occurred (will occur) outside the 30-day period so the loss is not precluded per Section 1091.

Disallowance of loss deduction

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, the taxpayer has acquired (by purchase or by an exchange on which the entire amount of gain or loss was recognized by law), or has entered into a contract or option so to acquire, substantially identical stock or securities, then no deduction shall be allowed under secrion 165 unless the taxpayer is a dealer in stock or securities and the loss is sustained in a transaction made in the ordinary course of such business. For purposes of this section, the term “stock or securities” shall, except as provided in regulations, include contracts or options to acquire or sell stock or securities.

[JJ1847]

Awesome!  Thank you so much for your kind assistance!

[fanfare]

12/28 is the last day to sell stock for a loss because your sale has to settle by Dec 30 the last business day.

Stocks settle in two days.

@JJ1847 

[JJ1847]

Great! Good to know...appreciate the additional information! Thanks very much!

[Mike9241]

For most purposes, the tax law uses the trade date for both purchases and sales. For example, if you sell stock on December 31, you’ll report the gain or loss that year, even though the transaction will settle in January. Trade dates also govern in determining whether your holding period is short-term or long-term, in determining whether the wash sale rule applies, and in determining whether you have a qualified dividend.

You should be aware of a couple of exceptions:

When you close a short sale at a loss, the tax law treats the transaction as occurring on the settlement date. See Last Day to Sell.
If you hold more than one lot of shares and sell part of your holdings, you may want to identify the shares you’re selling. You can identif

[JJ1847]

Hi Mike,

Appreciate the clarification on the trade date.  That offers me a little more flexibility at the end of the year.

I am truly amazed at how quickly folks have responded and the quality of the guidance provided.

Thanks again and Happy Thanksgiving! Joe