Careful of Wash Sales

Josh Nowack

March 13, 2015

Every year while reviewing consolidated broker statements, I go through an exercise of reviewing all of the stock transactions.  As a result, every now and then, I'll see a code "W".  Now, code "W" on a broker statement means a wash sale.  Now taking a bath on a stock is never a good thing - including in wash sales.  

Under these rules if you sell stock for a loss and buy it back within the 30-day period before or after the sale date, the loss cannot be claimed for tax purposes. 

All is not lost as the loss is added to the cost basis of the subsequent "buy" transaction, but it is remarkably tax inefficient.  

It is important to know that while losses are blown out of the water, gains are not.  If you sell stock for a gain and buy it right back, you report the gain.  

As always, if you have questions, please let us know.



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How to drive your business into the ground

Josh Nowack

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From time to time, clients will ask me to check out investment opportunities.  And for avoidance of doubt, I do so not to recommend an investment and certainly not to sell investments....


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