Wash Sales

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  • #3032151

    Hi does any one know have a good video or lecture on wash sales? I am using wiley but keep getting things wrong. Does Ninja have a good video? Thanks!

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  • #3032169

    There are probably dozens more helpful videos available on youtube if this one doesn’t help.

    Good luck!

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    When you have unrealized gains as you hold lets say some stock or when you sell the asset for cash? The tax consequence from transactions of capital assets ( securities and other) come when you SELL something. Well the same goes for losses. But people try to game the system and this gaming is called wash sales. How does it work? Lets say you purchased one stock for 10 dollars and its now worth 5 dollars. You want to offset some capital gains, so what do you do? Sell it, no problem. But then you immediately buy the stock back at 5 dollars. What just happened? Did you really sell your one stock? Technically yes, but in theory no because at the end of the day you have the same asset as you did before yet you recognized a loss of 5 to offset your gains for the year. You essentially recognized an unrealized loss and the IRS says that's not allowed. If you had 2 shares of stock and only repurchased one, well then that is a partial legit sale and partial wash sale. One is allowed to be recognized as a loss for the year and the other is not.

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