Wash sale

Discussion in 'Tax' started by NoClue, Mar 21, 2012.

  1. NoClue

    NoClue Guest

    If I sell a stock at a loss; and buy the same stock within 30 days
    before or after the sale, the loss is deferred.

    What if I buy options on that stock to maintain my position --
    immediately before or after the sale. Is that considered as wash sale
    and defer the tax loss?

    To make sure I maintain the position in the stock I sold, I can buy
    calls *and* sell puts -- at a price that is close to the price I sold
    the stock. Of course, I can always sell the call or buy back the put
    (or both) and never own the stock again.

    If the above is a wash sale, what if I only buy calls OR sell puts
    (but not both)? This strategy means I can own the stock only if the
    stock price moves the direction of my options; but not if the stock
    price move against me.

    TIA
     
    NoClue, Mar 21, 2012
    #1
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  2. Buying a call on the same stock, no matter how far out of the money the
    call is, turns the loss sale into a wash sale.

    Selling "deep in the money" puts (there's no precise standard
    on what's "deep in the money" in this regard) will also turn the
    loss sale into a wash sale.
     
    Rich Carreiro, Mar 21, 2012
    #2
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  3. NoClue

    NoClue Guest

    Under the new IRS rules, am I correct that the brokerage firms have to
    report Wash Sales on the 1099B?

    If yes, then they are going to determine "deep in the money" puts.
    Are they going to be super conservative and classify all stocks sold
    with puts written within 30 days as Wash Sales? Or how do we find out
    what is their definition of "deep in the money" puts?

    TIA
     
    NoClue, Mar 22, 2012
    #3
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