Question on Long Term Capital Gains?

Question

Hello,

I was just wondering whether the following scenario is true:

I have a stock that I had planned to hold for a long time (definitely over a year). I bought it 10 days ago and as of today, the value of my purchase has dropped $1000.

I still plan to hold the stock, but my question is this: should I sell the stock and buy it back at the same price seconds later? My reasoning is that I will be able to declare the $1000 loss on my taxes for this year (short term), and when I finally sell the stock (hopefully for a profit) the amount that I regain will be taxed at the long term rate (as well as in a later year).

Is this correct?

Thanks!!

Answer 1

If you do that, you would be doing what is called a "wash sale". The IRS says that if you sell a stock at a loss and buy it back within 30 days from selling it, the loss is disallowed. You have to add it back into your cost basis and get the loss later. I have included a link to "wash sales"

Answer 2

No.

Your example is the classic definition of a "Wash Sale". If you sell a stock at a loss, you must wait over 1 month before you can re-buy it if you want to claim the loss.

Answer 3

Wayne and PepsiLime are absolutely correct. This is a washsale, and the IRS won't allow the loss. If you do sell it at the 1000.00 loss, the loss is added back to the original basis. Wait it out a month, or buy some at the lower price to reduce your per share basis. Good luck

Answer 4

Nope, not correct - if you sell, then buy it back within 30 days, it's considered a "wash sale" and you can't deduct the loss for the current year. Sorry.

Answer 5

That would be called a wash transaction. You have to wait 30 days to buy the stock back.