Stock wash sale

[douglasjia]

I have some stocks that have almost lost all their value over the past three years. I held onto them to use the losses to offset my gains from company stock. For example, if I sell these stocks at a $30,000 loss (held for more than three years) and sell my company stock with a $50,000 short-term capital gain, would I only need to pay capital gains tax on the $20,000 net gain (50k - 30k) this year? Additionally, if I repurchase my company stock immediately after selling, would this trigger a wash sale and prevent me from resetting the cost basis on the company stock? I am optimistic about my company’s stock, but I want to leverage its growth to offset my losses on other investments.

[Bsch4477 · Accepted solution]

A wash sale is only triggered when you sell at a loss and  purchase  the same asset before or after 30 days. 

[douglasjia]

Given my company stock is gain, it won't trigger wash sale and I can use the gain to offset my loss as planned, right?

[Bsch4477]

Right. 

[Hal_Al]

Q. If I sell these stocks at a $30,000 loss and sell my company stock with a $50,000 short-term capital gain, would I only need to pay capital gains tax on the $20,000 net gain (50k - 30k) this year?

A.  Yes.  You are allowed to off set short term capital gains with other long term losses.

Q. If I repurchase my company stock immediately after selling, would this trigger a wash sale and prevent me from resetting the cost basis on the company stock?

A.  No. Wash sale rules do not apply to stocks sold at a gain.  The wash sale rule only apply when you sell at a loss.

[SteamTrain]

Though...an added point of caution here

.....IF you have other long-term gains, the long-term loss will be used against those first, and might result in a larger amount of short-term gain that will be taxed, than you originally planned on.

For example, even if you don't have any other long-term gains from other stock sales during the year, some folks forget that they will get long-term gain distributions from Mutual Funds they own (reported in Box 2a on 1099-DIV forms), which usually happens right at the end of the year (most happen in December), and your planned sales, resulting long-term losses will be used against those Mutual Fund gain distributions first.  

[SteamTrain · Accepted solution]

@douglasjia 

....OK, another "However" thought.

The company stock is actually company stock you already own and hold??

1) If Yes, then all of the comments above apply.

2)  If a NO, because the company stock is in company stock option grants you have not yet exercised, then I'm pretty sure those gains are treated differently...either as exercised NQSO's or as disqualifying ISO exercises, where the gains are directly reflected and taxed on your year-end W-2 as ordinary income....and I don't "think" the long-term losses will offset those at all. 

(At least I think that's the case, as I'm getting into a hazy area somewhat out of my personal knowledge...and not conversant on exactly how ISO's....if bought and actually held for awhile, but for less than a year, how those get reflected ...on a W-2 or perhaps some other means)