It seems as though the stock market has been on a roller coaster ride for most of the year with all of its ups and downs.
Did you sell stock for a gain during the year and are now looking to offset some of those gains during the fourth quarter? If so, it’s important to be aware of the “wash sale” rule in order to prevent any unexpected year-end tax planning faux pas.
Under the wash sale rule, when stocks or securities are sold for a loss and substantially identical stocks or securities are repurchased within a 30-day period before or after the sale date, the loss cannot be claimed for tax purposes. This rule is designed to prevent taxpayers from using the tax benefit of a loss without parting with their stock ownership in any significant way. Participation in a dividend reinvestment plan can trigger this rule if stocks are sold within a 30-day period prior to the issuance and reinvestment of a dividend.Continue reading