Long to short term loss?


J

Jerohm

Can you sell a stock with a long term capital loss and buy
it back in less than 30 days, effectively converting a long
term loss into a short term loss? I KNOW you can't
claim(use) the loss until you sell the new position and stay
out of the stock for more than 30 days. I am sure that I am
not the first to think of this, but I haven't been able to
find any documentation strictly addressing this behavior
(but I haven't really looked too hard either!) Thanks
 
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I

IraS1

Can you sell a stock with a long term capital loss and buy
it back in less than 30 days, effectively converting a long
term loss into a short term loss? I KNOW you can't
claim(use) the loss until you sell the new position and stay
out of the stock for more than 30 days. I am sure that I am
not the first to think of this, but I haven't been able to
find any documentation strictly addressing this behavior
(but I haven't really looked too hard either!) Thanks
No, you can't. When you have a wash sale, not only do you
roll the loss into the new cost basis, you reset the holding
period to the purchase date of the sold lot. So, your
long-term loss retains its long-term character in the new
holding.

Ira Smilovitz
 
H

Herb Smith

Jerohm said:
Can you sell a stock with a long term capital loss and buy
it back in less than 30 days, effectively converting a long
term loss into a short term loss?
NO, the wash sale rules don't work that way. When you adjust
the basis of the "replacement" shares for the deferred loss,
you also change the holding period of the replacement shares
to that of the shares sold for a loss. If the deferred loss
(the wash sale) was Long Term, then eventual sale of the
replacement shares will be either LT gain or loss.
 
A

A.G. Kalman

erohm said:
Can you sell a stock with a long term capital loss and buy
it back in less than 30 days, effectively converting a long
term loss into a short term loss? I KNOW you can't
claim(use) the loss until you sell the new position and stay
out of the stock for more than 30 days. I am sure that I am
not the first to think of this, but I haven't been able to
find any documentation strictly addressing this behavior
(but I haven't really looked too hard either!) Thanks
When you buy it back within the 30 day period you create a
wash sale. You can't claim a loss. The basis of the new
stock includes the disallowed loss on the stock sold. The
holding period for the new stock includes the holding period
of the sold stock.
 
A

Arthur Kamlet

Jerohm said:
Can you sell a stock with a long term capital loss and buy
it back in less than 30 days, effectively converting a long
term loss into a short term loss? I KNOW you can't
claim(use) the loss until you sell the new position and stay
out of the stock for more than 30 days. I am sure that I am
not the first to think of this, but I haven't been able to
find any documentation strictly addressing this behavior
(but I haven't really looked too hard either!) Thanks
Pub 550 will tell you the stock you acquire in a wash sale
takes the holding period of the stock you sold at a loss.
So, no, you cannot convert a long term to a short term loss.

__
Art Kamlet ArtKamlet @ AOL.com Columbus OH K2PZH
 
D

D. Stussy

Jerohm said:
Can you sell a stock with a long term capital loss and buy
it back in less than 30 days, effectively converting a long
term loss into a short term loss? I KNOW you can't
claim(use) the loss until you sell the new position and stay
out of the stock for more than 30 days. I am sure that I am
not the first to think of this, but I haven't been able to
find any documentation strictly addressing this behavior
(but I haven't really looked too hard either!) Thanks
No. See "wash sale."
 
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P

Phil Marti

Jerohm said:
Can you sell a stock with a long term capital loss and buy
it back in less than 30 days, effectively converting a long
term loss into a short term loss?
No. When the wash sale rule applies, the holding period
remains unchanged.

Phil Marti
Clarksburg, MD
 
R

Rich Carreiro

Jerohm said:
Can you sell a stock with a long term capital loss and buy it back
in less than 30 days, effectively converting a long term loss into a
short term loss?
No.

I KNOW you can't claim(use) the loss until you sell the new position
and stay out of the stock for more than 30 days.
The was sale rule (to which you are referring) not only
tacks the disallowed loss onto the basis of the
"replacement" stock, it also tacks the "washed" stock's
*holding period* onto the "replacement" stock. As you can
see, that will prevent the conversion of LT loss into ST
loss.
am not the first to think of this, but I haven't been able to find
any documentation strictly addressing this behavior (but I haven't
really looked too hard either!) Thanks
See IRS Pub 550 and look for the section on wash sales.
 
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C

Christopher Green

Jerohm said:
Can you sell a stock with a long term capital loss and buy
it back in less than 30 days, effectively converting a long
term loss into a short term loss? I KNOW you can't
claim(use) the loss until you sell the new position and stay
out of the stock for more than 30 days. I am sure that I am
not the first to think of this, but I haven't been able to
find any documentation strictly addressing this behavior
(but I haven't really looked too hard either!) Thanks
The bought-back stock receives the purchase date of the
original stock. This means you can't shorten your holding
period by a wash sale. This also means you can mistime your
sales in such a way as to convert two short-term losses into
one long-term loss.
 

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