Permalink Submitted by Clyde Wolf on Tue, 2009-04-07 00:13
Blixen8,
Yes, the wash sale rule comes into play.
The purpose of the wash sale rule is to not allow the loss unless there is a period of 61 days of non-ownership. Purchasing the stock in your IRA, well you still own the stock, and the loss would be disallowed.
Permalink Submitted by Alan Spross on Tue, 2009-04-07 00:49
I agree.
But this is worse than the wash sale rule in taxable accounts because the replacement shares in the taxable account receive a higher basis for the disallowed loss, so in reality the loss is only deferred. Conversely, if the IRA purchases the replacement shares, there is no added basis benefit and therefore the loss is permanently forfeited. It is usually easy enough to select a surrogate for the issue that was sold that is similar enough to do the job, but not substantially identical to the issue sold in the taxable account.
Permalink Submitted by Clyde Wolf on Tue, 2009-04-07 00:13
Blixen8,
Yes, the wash sale rule comes into play.
The purpose of the wash sale rule is to not allow the loss unless there is a period of 61 days of non-ownership. Purchasing the stock in your IRA, well you still own the stock, and the loss would be disallowed.
Permalink Submitted by Alan Spross on Tue, 2009-04-07 00:49
I agree.
But this is worse than the wash sale rule in taxable accounts because the replacement shares in the taxable account receive a higher basis for the disallowed loss, so in reality the loss is only deferred. Conversely, if the IRA purchases the replacement shares, there is no added basis benefit and therefore the loss is permanently forfeited. It is usually easy enough to select a surrogate for the issue that was sold that is similar enough to do the job, but not substantially identical to the issue sold in the taxable account.