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- For IRS ruling purposes, “substantially all” means 90% of the net assets and 70% of the gross assets, while courts have applied a facts-and-circumstances test focused on operating assets.
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May 3, 2024 · Under the wash sale rule, 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. TABLE OF CONTENTS. What is the wash sale rule? What does “substantially identical” mean for wash sale rule purposes?
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- What the wash sale rule is. The wash sale rule states that if you buy or acquire a substantially identical stock within 30 days before or after you sold the declining stock at a loss, you generally cannot deduct the loss.
- What happens when you have a wash sale. If you experience a wash sale, the capital loss that is disallowed by the IRS is included in the cost basis of the replacement stock.
- How to avoid the wash sale rule. If you want to avoid the IRS disallowing your loss due to the wash sale rule, you have a few options. One choice is to hold off on repurchasing the same or very similar stock that you sold.
- How the wash sale rule works: Examples. If you're trying to figure out if the IRS might disallow some of your capital losses, IRS Publication 550 contains some wash sale rule examples that could help.
Apr 11, 2024 · A wash sale happens when you sell a security at a loss and buy a “substantially identical” security within 30 days before or after the sale. The wash-sale rule prevents taxpayers from deducting paper losses without significantly changing their market position.
Jul 27, 2023 · What is the wash-sale rule? When you sell an investment that has lost money in a taxable account, you can get a tax benefit. The wash-sale rule keeps investors from selling at a loss, buying the same (or "substantially identical") investment back within a 61-day window, and claiming the tax benefit.
Jun 30, 2021 · The challenge is navigating the “wash sale” rules promulgated by the Internal Revenue Service that nix buying back the same or “substantially identical” securities within 30 days of the sale.
Sep 8, 2023 · The wash sale rule prohibits taxpayers from claiming a loss on the sale or other disposition of a stock or securities if, within the 61-day period that begins 30 days before the sale (generally, the trade date) or other disposition, they: Acquire the same or “substantially identical” stock or securities; or.
Nov 6, 2023 · So, you must work closely with your tax advisor to confirm whether or not a particular transaction may give rise to a wash sale. Another key determination is whether two securities are “substantially identical”; but, the wash sale rule uses this term without precisely defining it.
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