disallowed losses
Client sells 20,000 shares of citi Nov 20 and realizes 400,000 in losses in a taxable account mostly long term but some short term.
Nov 24 ( 10 am) client not aware of recent revenue ruling that wash sale rules apply to ira accounts buys 5,000 citi in ira thinking all his 400,000 will be allowed
Nov 24 (1pm) client calls broker , tells broker his accountant just informed him he will be subject wash sale rule and asks broker to ” bust trade ” .
Broker says he cannot “bust” or “undo” trade as per rules .. he can only sell the stock if client wished
Question: Can anyone come up with any proper way client will still be able to take the full losses. It was a dumb mistake on clients part , client caught it n a few hours. Does he have to forgo what amounts to 90,000 in disallowed losses. Any thing the accountant can do tax time to ameliorate situation.
Rebooking the trade is not an option.
Thanks
Permalink Submitted by Alan Spross on Mon, 2008-11-24 23:35
No proper work around that I am aware of. At least, he still has 75% of the losses to work with.