Replies to post #108234 on Savvy Trades and Investments

[wadegarret]

Citrix- Wash Sale Rule

"The wash sale was created to stop people from using it as a way of taking a loss on something that they still want to own" . So the government knows what is in somebody's mind ? Bottom line is, an investor should have every right to take a loss on any stock at any time, and buy it back at any time, just as they can a gain, with no penalty.

The fact that the wash sale loss disallowed is added back to the cost basis of the remaining shares, doesn't discount the fact that you have to pay taxes on that disallowed wash sale loss in the tax period it occurred in, and to make it back, you must make future gains to off set it. So if you sell $500K of a given stock on dec 15, 2023 and buy it back on Jan 10, 2024, you have to pay taxes on that $500K in 2023 ! When it's then added back to the cost basis of the remaining shares, you do eventually get that loss, when you sell the stock, and don't buy it back for 30 days. However to make up for the taxes paid in 2023, you must make enough stock gains in 2024 to offset the wash sale loss disallowed in 2023. If you don't, you get stuck with having paid a huge tax bill in 2023, which you may never get back, plus the interest on that !