Selling stox end of year for a loss for taxes?

**bjl584** · 12-15-2011, 08:21 AM

It may be better to just buy more shares at the lower share price to dollar cost average your investment a bit. That is, if your research points to those particular stocks still being a good investment.

You could in theory dump your holdings at a loss on the last business day of 2011, and then immediately rebuy them on the first day of trading in 2012 and write off part of your losses. But as a longer term strategy, I'd be more inclined to buy more shares at the lower price.

**thomsoad** · 12-15-2011, 09:30 AM

Originally posted by bjl584 View Post

It may be better to just buy more shares at the lower share price to dollar cost average your investment a bit. That is, if your research points to those particular stocks still being a good investment.

You could in theory dump your holdings at a loss on the last business day of 2011, and then immediately rebuy them on the first day of trading in 2012 and write off part of your losses. But as a longer term strategy, I'd be more inclined to buy more shares at the lower price.

That is what I am planning to do. But i was wondering if there is a penalty for selling a stock and then immediately rebuying it?

**bjl584** · 12-15-2011, 10:55 AM

Originally posted by thomsoad View Post

That is what I am planning to do. But i was wondering if there is a penalty for selling a stock and then immediately rebuying it?

No penalty for common shares. You will just have to pay the commission charges.

**jpg7n16** · 12-15-2011, 10:11 PM

Originally posted by thomsoad View Post

So I am wondering if there are any penalties for selling these stox at the end of this year for tax rideoffs and then immediately rebuying them?

Originally posted by bjl584 View Post

No penalty for common shares. You will just have to pay the commission charges.

Although there is no 'penalty' charged from the brokerage, ie - they won't charge you a fee for doing it, there is actually a 'penalty' from the IRS.

It's called the "Wash Sale" rule.

They created the rule just for this scenario. If you sold (to harvest a loss) and rebought within 30 days, you are not allowed to deduct the loss. Also, if you tried to cheat and buy more shares 1st, then sell the ones in a loss - you can't do that either.

There is essentially a 61 day window (30 before, 1 day of, 30 after) where if you repurchase substantially the same security you are not allowed to claim the loss. You can, however buy a completely different security.

What is a Wash Sale? - TurboTax� Software Support

Wash Sales

Selling stox end of year for a loss for taxes?