By: Martin M. Shenkman, CPA, MBA, JD
These rules prevent you from claiming a tax loss on selling a stock if shortly before or after that sale you have acquired substantially the same stock. The rationale is that you have not really realized a tax loss if you still own substantially the same stock. The IRS has just expanded the reach of the Wash Sale rules under Code Section 1091. You cannot deduct a tax loss on the sale of any securities if, within a period 30 days before the sale through 30 days after the sale, you acquire substantially identical securities. A recent ruling has held that if you sell securities for a loss and have your IRA or Roth IRA purchase substantially identical securities within 30 days before or after the sale, you will not be able to claim the tax loss on the sale of the securities. Rev. Rul. 2008-5, 2008-3 IRB. Further, your tax basis in your IRA or Roth IRA will not be increased under IRC Sec. 1091(d) .
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