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Posted by kupchik on April 7, 2008, 4:16 pm
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If you sell a stock in a taxable account at a loss and then buy it
back in an IRA account within 30 days, are you allowed to claim the
loss?
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Posted by Phil Marti on April 7, 2008, 4:30 pm
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> If you sell a stock in a taxable account at a loss and then buy it
> back in an IRA account within 30 days, are you allowed to claim the
> loss?
No, according to the IRS. I don't know if it's been litigated, but I don't
think so.
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Phil Marti
Clarksburg, MD
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<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
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Posted by joetaxpayer on April 7, 2008, 5:45 pm
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Phil Marti wrote:
>
>
>>If you sell a stock in a taxable account at a loss and then buy it
>>back in an IRA account within 30 days, are you allowed to claim the
>>loss?
>
>
> No, according to the IRS. I don't know if it's been litigated, but I don't
> think so.
I thought we had a definitive answer back in December:
The IRS yesterday issued an advance copy of Rev. Rul. 2008-5, 2008-3
I.R.B. ___ (1/22/08), which applies the § 1091 wash sale rules where a
taxpayer sells stock or securities at a loss and then causes her IRA to
purchase substantially identical stock or securities within thirty days.
As a result, the loss on the sale is disallowed and the taxpayer's
basis in the IRA is not increased.
http://taxprof.typepad.com/taxprof_blog/files/rev.%20Rul.%202008-5.pdf
is a copy of the ruling.
Good FAQ item, BTW.
Joe
www.blog.joetaxpayer.com
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<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
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<< Copyright (2007) - All rights reserved. >>
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Posted by Phil Marti on April 7, 2008, 6:17 pm
Please log in for more thread options "joetaxpayer" wrote:
>> No, according to the IRS. I don't know if it's been litigated, but I
>> don't think so.
>
> I thought we had a definitive answer back in December:
>
> The IRS yesterday issued an advance copy of Rev. Rul. 2008-5, 2008-3
That's the "IRS" part of my response to OP.
Revenue Rulings are given a lot of weight, but they're not definitive. They
can still be challenged in court, and AFAIK this issue hasn't had its day in
court.
This question has been buzzing around for years, and I'm curious why it took
IRS so long to come out with an official position. It could be because
there were hotter issues to be addressed. It could be because they weren't
really comfortable with the position.
In any event, while it's unusual for IRS positions to be reversed by the
courts, it's hardly unheard of.
--
Phil Marti
Clarksburg, MD
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
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Posted by D. Stussy on April 7, 2008, 10:30 pm
Please log in for more thread options > Phil Marti wrote:
> >>If you sell a stock in a taxable account at a loss and then buy it
> >>back in an IRA account within 30 days, are you allowed to claim the
> >>loss?
> >
> > No, according to the IRS. I don't know if it's been litigated, but I
don't
> > think so.
>
> I thought we had a definitive answer back in December:
>
> The IRS yesterday issued an advance copy of Rev. Rul. 2008-5, 2008-3
> I.R.B. ___ (1/22/08), which applies the § 1091 wash sale rules where a
> taxpayer sells stock or securities at a loss and then causes her IRA to
> purchase substantially identical stock or securities within thirty days.
> As a result, the loss on the sale is disallowed and the taxpayer's
> basis in the IRA is not increased.
>
> http://taxprof.typepad.com/taxprof_blog/files/rev.%20Rul.%202008-5.pdf
> is a copy of the ruling.
>
> Good FAQ item, BTW.
I'd say that such could be a bad ruling. In general, a taxpayer and his IRA
are separate (but related) entities, especially for ownership purposes
(although one owns the other). The next thing we know, the IRS will issue a
ruling with regard to partnerships (or S-corps) held by the same owner where
one PS sells and another buys - thus disallowing the loss for the partner.
What a mess that could be - as Schedule K-1's only list dollar amounts, not
what was sold or when during the year.
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
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