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Posted by garagecapital on May 1, 2007, 7:12 pm
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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?
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Posted by joetaxpayer on May 3, 2007, 2:23 pm
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garagecapital@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've considered similar whacky schemes. This is the 'Lucy
Ricardo' of investing. If you buy X within 30 days (before
or after) of a loss on X in a different account, you have a
wash sale problem. The use of an IRA doesn't change that,
per http://www.fairmark.com/capgain/wash/wsira.htm In the
end, when I am doing my year end planning, if I have a stock
I wish to use for a tax loss, I double up in November, and
sell the shares for the loss in December. I'd be curious to
see if any other replies contradict this. I believe
Fairmark's interpretation is accurate.
JOE
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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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<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
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<< Copyright (2006) - All rights reserved. >>
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Posted by Phil Marti on May 3, 2007, 2:23 pm
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> 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?
The issue of whether replacement assets in an IRA can create
a wash sale outside the IRA is unsettled. I've seen good
arguments both ways. IRS hasn't taken any formal position,
and AFAIK the issue hasn't been litigated.
I say, "Go for it" with full disclosure. It would be nice
to see this litigated and settled.
--
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 (2006) - All rights reserved. >>
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Posted by Rich Carreiro on May 3, 2007, 2:23 pm
Please log in for more thread options garagecapital@gmail.com writes:
> 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.
This is one of the perennial arguments here and in
other online tax fora.
You will find some people who say it is kosher
You will find some people who say it's a wash sale.
You will find some people (such as Kaye Thomas over
at fairmark.com) who say it's a related-party sale
(so even worse than a wash sale).
--
Rich Carreiro rlcarr@animato.arlington.ma.us
<< ------------------------------------------------------- >>
<< 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 (2006) - All rights reserved. >>
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Posted by Seth on May 5, 2007, 6:36 am
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> 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?
If you could make money in the IRA with little risk, why not
just do that and don't bother losing money in the other
account?
Seth
<< ------------------------------------------------------- >>
<< 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 (2006) - All rights reserved. >>
<< ------------------------------------------------------- >>
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