Does the IRS wash sale rule apply to gains as well as losses?

Question

I have found several references to the wash sale rule expressed in terms of a caution against rebuying a stock within 30 days if you have a loss on a stock sale that you wish to deduct.

My question relates to the case where you have taken a gain on a stock sale. Does the wash sale rule still apply. If I rebuy the same security within 30 days, can I avoid taking the capital gain on the previous profitable sale?

Answer 1

No: you can do a wash sale to pay tax in a year where the capital gains tax charged will be low because you have no other income, or because you expect the CGT rate to rise (from 15% to 20%, say).

This is a longstanding rule. See IRC §1091 at http://www.law.cornell.edu/uscode/html/uscode26/usc_sec_26_00001091----000-.html

Answer 2

The way I read the wash sales rule (in its terribly esoteric
language), you apply it only to losses. That is, in the 30 days either before or after your loss-sale you must not have bought options (to acquire) or the "identical" stock . If you have, then you're DENIED (delayed might be the better word choice.) the loss (and you have some more complicated bookkeepping to do).

However, if you sell for a gain, then that is reportable. (That is, I think you must report that gain.) When you rebuy the same stock you're starting a NEW holding period (short term for a year). The IRS wants your taxes from the gain on your sale, be it long or short term. (Isn't that the way the IRS money ratchet works? Money goes into IRS easy; money comes out of it with some hitches. :) )

Answer 3

Do wash sale rules apply in an Roth IRA account

Answer 4

This is confusing because brokers report GAINS as wash sales for dividends sold within 30 days even if they are sold as a Gain.

Answer 5

No. The rule applies only to losses. A gain must still be recognized.

Answer 6

Nice try...but no. Wash sales only apply to losses.

Answer 7

No it does not apply to gains... only losses.

Answer 8

Yes.