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Posted by DF2 on May 11, 2007, 12:13 am
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nickr wrote:
>> nickr wrote:
>>> Ok, let's assume the issue is vague with the IRS on the wash
>>> sales.
>> I assume that whether the wash sale rules include looking at
>> IRA transactions is a high-visibility thing. If the IRS
>> thought that a person who's IRA reinvested a dividend in GM
>> would be prohibited from taking a loss on a GM share sale
>> within 30 days of that dividend, they would not be shy about
>> saying so.
>>
>> Yet some others come to a different conclusion.
>>> 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.
>> I think that taking the loss there is fine, tho this could
>> come closer to being thought of as self dealing. I would
>> not interpret your simple act as being the "Advanced
>> trading" that garagecapital proposed. I am assuming that
>> the trades you described were such that they would be
>> unlikely to be trades between you and your IRA.
>> Advanced/clever strategies in this area raises my
>> suspicions.
>>
>> See the discussions on self dealing:
>> http://www.trustetc.com/investment/prohibited-ira-transactions.html
>> http://www.google.com/search?hl=en&q=ira.+%22self+dealing%22&btnG=Search
>>> Or are wash sales illegal even if you don't take the tax
>>> deduction?
>> Wash sales are not illegal. Not properly reporting them as
>> such would be.
>>
>> My opinions in tax rules are non-expert.
> How does one properly report a wash sale when the gain is in
> an IRA and the loss is in a taxible account?
Since I believe that the wash sale rule does not apply, I
think you just report the loss on schedule D.
Remember that I am not expert, but I don't remember an
expert posting case law or rulings on this.
However if you are did the self-dealing that I suspect might
be involved in the original scenario, I don't know where to
confess that. You or your lawyer could come clean and try to
make a settlement. It may be considered a distribution from
your IRA.
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