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Beware, Expanded Wash Sale Rules Look Through to Owners' IRA Stock Sales

The IRS has prohibited a technique used to avoid the wash sale rules. The wash sale rules prevent the recognition of a loss where substantially identical stock or securities are bought within a 61-day period surrounding the sale of a stock at a loss. In the past, individuals could avoid these rules by selling a stock at a loss and then having their IRA repurchase the same stock within the disallowed period. The IRS recently issued a ruling stating that if an individual sells stocks or securities at a loss and their IRA or Roth IRA repurchases a substantially identical position, then the loss will be disallowed. Under the wash sale rules, any disallowed loss is added to the basis of the stock. However, the IRS stated in the ruling that any repurchase occurring through the IRA does not get a basis adjustment.

For more information on this topic, please contact Brian Carter at 312-980-2994 or your Blackman Kallick representative.

This publication is part of Blackman Kallick’s marketing of professional services, and is not written tax advice directed at the specific facts and circumstances of any person and/or entity. Contents of this publication are of a general nature, and you should not act on this information without obtaining professional advice from your business advisor that is appropriately tailored to your individual needs and circumstances. This written advice is not intended or written to be used, and cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.