Tax Loss Harvest - When and What You Buy

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justsomeguy2018
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Tax Loss Harvest - When and What You Buy

Post by justsomeguy2018 » Thu Dec 06, 2018 8:59 pm

If I buy 110 shares of Stock XYZ on Oct 28th at Brokerage #1, and

I buy another 110 shares of Stock XYZ on Dec 1st at Brokerage #2, and

I decide being in Stock XYZ is not where I want to be anymore, then

If I sell the 110 shares of Stock XYZ that were bought at Brokerage #1 but don't sell the 110 at Brokerage #2, am I guilty of a wash sale (bought new shares 30 days before selling) ?

If I sell the 110 shares of Stock XYZ that were bought at Brokerage #2, is that a wash sale? Since I am just selling the same shares I had just bought?

student
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Re: Tax Loss Harvest - When and What You Buy

Post by student » Thu Dec 06, 2018 9:28 pm

My understanding is yes in the first case and an effective no in the second case.

livesoft
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Re: Tax Loss Harvest - When and What You Buy

Post by livesoft » Thu Dec 06, 2018 9:49 pm

There is no wash sale at all because you sold at a gain. After all, if you are picking individual stocks like XYZ, they only go up, right?

You have to sell something at a loss to even consider the wash sale rules in the first place.
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justsomeguy2018
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Re: Tax Loss Harvest - When and What You Buy

Post by justsomeguy2018 » Thu Dec 06, 2018 10:50 pm

livesoft wrote:
Thu Dec 06, 2018 9:49 pm
There is no wash sale at all because you sold at a gain. After all, if you are picking individual stocks like XYZ, they only go up, right?

You have to sell something at a loss to even consider the wash sale rules in the first place.
Obviously the sales would be at a loss

rkhusky
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Re: Tax Loss Harvest - When and What You Buy

Post by rkhusky » Fri Dec 07, 2018 6:43 am

student wrote:
Thu Dec 06, 2018 9:28 pm
My understanding is yes in the first case and an effective no in the second case.
+1 if the stocks are in a taxable account and the sales are for losses. The key is to look for replacement shares purchased within +- 30 days of the sale. If there are no replacement shares, there is no wash sale (apart from transitory wash sales).

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grabiner
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Re: Tax Loss Harvest - When and What You Buy

Post by grabiner » Fri Dec 07, 2018 10:08 pm

If you want to get out of XYZ, you should sell at both brokers. If you sell the older shares first, you will have a wash sale, but it won't cost you anything. The loss is disallowed, but it is added to the basis of the replacement shares. Thus, when you sell the newer shares, you get back the disallowed loss.

Example:

Bought 110 shares for $25 on 10/28.
Bought 110 shares for $20 on 12/1.
Sold the 10/28 shares for $15 on 12/10. You do not deduct the loss, but your basis in the 12/1 shares is increased by $10 per share.
Sold the 12/1 shares for $15 on 12/11. The basis of these shares is now $30, so you have a capital loss of $15 per share, which is the full $1650 you lost on the two trades.
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