If you buy and sell entirely within the IRA, wash sales are irrelevant as there are no capital gains or losses to report. If you sell for a loss in a taxable account and then buy back in an IRA within the wash sale window, you lose the loss forever. See Rev. Rul. 2008-5.

 

Ira Smilovitz

 

What about within IRA's.  Does the wash sale rule apply?

From: club_cafe@bivio.com [mailto:club_cafe@bivio.com] On Behalf Of Laurie Frederiksen
Sent: Friday, March 30, 2012 11:33 AM
To: The Club Cafe
Subject: [club_cafe] Stop Loss Orders and Wash Sales

Some of you set stop loss orders on all of your stocks and many of you may be considering them to protect some of your recent gains in the market.

Just a heads up.  If they trigger and you sell the stock for a loss.  (You can see this on the Capital gains/losses report),  but then decide you really want to keep the stock so you repurchase it within 30 days of the sale,  you will have triggered a wash sale.

The loss will be "disallowed" until you do finally close out your position or do finally sell the shares for a gain.

A wash sale requires us to make manual adjustments to your account to make sure everything is reported correctly on your taxes.  It also requires you to let us know we need to make these adjustments.

It is something that will eventually affect your 1099 reporting.  If you let us know during tax season,  it may delay you getting your taxes done, as the entries can be complicated for us to calculate and there may be many accounting entries necessary.

However,  if you let us know when the wash sale occurs, any time during the year,  we can make the adjustments at that time and you'll be good to go when it's tax time.

I'd recommend that you take a few minutes to review the transactions for all of your investments.  You may have some wash sales from past transactions that need to be adjusted.

It's easy to find them.  Look for sales that occurred within 30 days (plus or minus) of a purchase.  If the sale produced a loss,  you've got a wash sale.   Just email us at support@bivio.com and we'll look at it for you and make any adjustments you need.

Laurie Frederiksen
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