2 Accounts, Same Bought Symbol in Each, Wash Sale Question:

Forum|Forum|4 years ago
March 29, 2022
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Scenario: In one account I bought 10 shares of IBM 2 years ago. In the other, I bought 10 shares of IBM 2 weeks ago. I am the sole owner and operator of both accounts. There are no other buys of IBM at anytime other than just described.

Suddenly I sell (actual sale 1) the 10 shares bought 2 years ago at a loss.
The next day the shares of IBM I bought 2 weeks ago are significantly higher in price, so if I sold them (potential sale 2) it would be a gain.

BUT, do I have to wait 30 days to sell these bought 2 weeks ago (potential sale 2) to avoid the ones I sold after 2 years (actual sale 1) - to avoid actual sale 1 being a wash sale?

How do I proceed with the shares bought 2 weeks ago to avoid a wash sale?

R

RaifH

No, you do not have to wait to sell the shares you purchased two weeks ago. Wash sales occur if you rebuy the sold stock within 30 days of selling it. Selling additional stock within 30 days does not trigger a wash sale.

If you were to rebuy IBM stock within the 30 day period following the sale, then that loss would be considered a wash sale. It does not matter which brokerage account you purchase the stock from. The brokerage you sold the IBM stock would know that it is a wash sale and treat it appropriately on Form 1099-B. If you bought the shares at another brokerage, they would not know that it triggered a wash sale and the onus would be upon you to report everything accurately.

J

j gAuthor

Employee

I really appreciate your answer - not just "what I wanted to hear." I think you're right.

On this:

"If you were to rebuy IBM stock within the 30 day period following the sale, then that loss would be considered a wash sale."

When you say "that loss" with the previous sentence - this is why I labeled each buy and sell with a name, for specific reference - you mean "that loss" to be the loss on (actual sale 1)? Or any sale, loss or gain on this new IBM purchase you made within 30 days after (actual sale 1)?

Then also: but if I did buy (buy x) within the 30 day period, then sold this buy (buy x) within a few days AT A GAIN, I presume the previous sale (actual sale 1- the one I sold after holding 2 years) would still be a wash sale?

JohnB5677

If we say the purchase 2 years ago is Lot 1, and the one 2 weeks ago is lot 2.

When you sold Lot 1 at a loss it triggered the possibility of a wash sale. If lot 2 was purchased within 30 days before or after the sale of lot 1 you do have a wash sale and no loss can be taken, but it will be added to the basis of lot 2. When you sell Lot 2 the profit or loss will be evaluated based on the new cost basis.

Additionally, shares at different brokers are considered in total for tax purposes (wash sales). You cannot take a loss in one account and then replace them with substantially identical security in another account (within the 30-day window before or after the loss date).

The IRS considers First In First Out. If you sold Lot 2 it would be considered as if you were selling Lot 1 for tax purposes.

This all causes mental gymnastics, and when possible should be avoided.

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