Stop Loss Orders and Wash Sales
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.
In a message dated 3/30/2012 12:53:40 P.M. Eastern Daylight Time,
about within IRA's. Does the wash sale rule apply?
firstname.lastname@example.org [mailto:email@example.com] On Behalf Of Laurie
Sent: Friday, March 30, 2012 11:33 AM
Subject: [club_cafe] Stop Loss Orders and Wash
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
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
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
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 firstname.lastname@example.org and we'll look at it for
you and make any adjustments you need.
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