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Posted by nickr on May 7, 2007, 1:29 pm
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> garagecapi...@gmail.com wrote:
>> Let's say I had an IRA with $100K and a non-IRA brokerage
>> account with $100K and my aim, for tax purposes was to
>> generate losses in the non- IRA account but have off-setting
>> positions in the IRA. (I would generally do this with
>> futures options, btw.) I risk an accidental taxable gain
>> offset if the Non-IRA profits and the IRA loses, and the
>> latter , effectively, wipes out my gain. But in the inverse,
>> if my IRA positions go up, I get a tax-deferred gain and a
>> taxable loss in the non-IRA -- plus I have -- effectively --
>> moved money from a taxable to a tax-deffered account. What's
>> wrong with this scenario, besides the risk I already stated?
>> Is there a legal issue I am unaware of? Seems to me if you
>> do your probabilities correct and write futures options
>> naked in the IRa and buy them in the non-IRA, you could --
>> effctively -- money money into an IRA, with little risk, no?
> I don't think this is the typical question. The typical
> question would be along the lines that you take a loss in
> the regular account, and a few days later you buy the same
> security in an IRA account. People differ on that, and I am
> one who believes that is allowed without being having a wash
> sale.
>
> This descriptions sounds like you are figuring out how to do
> trades where you and your IRA are probable buyers and
> sellers of the same trades. If you are coordinating the
> trades between the account for effect, I think that would be
> a very different situation. You appear to be describing what
> I think would be clearly disallowed. Your last sentence
> hints at something that I expect is illegal.
Ok, let's assume the issue is vague with the IRS on the wash
sales. But what if taking the tax-deduction on the loss
wasn't the reason for making the trades? Suppose all you
wantd to do was take $100,000 from a non-IRA account and put
it in your IRA account. Wouldn't offsetting trades do this
and since you're not going to tax the tax deduction the wash
sale rule doesn't apply. You're not trying to tax a tax
deduction but merely move funds into a tax-deferred account.
Or are wash sales illegal even if you don't take the tax
deduction?
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