wash sale rule question from a noob

[MaxGriddy]

If i own stock of xyz for 2 years. Then sell calls on those stocks and buy them back, and then sell the stock for a loss within 30 days of the options transaction, is the loss considered a wash sale?

What if it was stock of xyz that I bought and disposed of along with my long term holdings of xyz within 30 days? My portfolio will be free of xyz stock for 30 days after the sale. Wash sale? I am confused.

Thanks for the help.

 

[wackypete2]

Wash sale rules can be tricky and confusing at times even for the IRS who doesn't make the rules. They only try to enforce the convoluted tax rules that congress dreams up. You would be better off contacting an accountant or tax expert.

Here's a simple rule of thumb that you can use: If the positions you acquired within the wash sale period permit you to participate in the same up and down market swings as the position that produced the loss, there's a chance the IRS will say you have a wash sale.

Peter

 

[MaxGriddy]

I guess I will have to get the services of a tax expert. This year is going to be a convoluted mess come tax time.

 

[dawsonagh]

Actually, wash sale rules apply when you sell at a loss within 30 days prior to or after the sales, in your description, your first sale (after you hold the stock for 2 yrs) and then you sell call, you don't tell us if you are a loss or not, if not, OK, your first sale may be a long term capital gain, then you bought it back, then sell at a loss, also not a wash sale.. but if you repurchase it again within 30 days, thus your first loss is a wash sale..

 

[Rhody Trader]

If you sell your XYZ shares at a loss, regardless of how long you held them, then repurchased within 30 days it would be a wash. The options transaction is an entirely seperate security, so it wouldn't factor in with you XYZ shares where any wash sale is concerned.