Do you have a stock with a big loss you want to deduct against your taxes in 2011? You also think you can make a killing on this stock in a week. Why not sell the stock now, take the loss, then buy it back tomorrow and make a killing without having to pay capital gains taxes on it right away? As long as you hold it you don’t pay capital gains tax.
Welcome to the real world, in the form of the wash sale rules. If you sell the stock at a loss, you can’t buy it back for 30 days before or after, or your loss becomes a basis adjustment to the stock you buy.
There are a couple of things to do. See the link below with a couple of the solutions, none too good:
http://www.myfederalretirement.com/public/773.cfm
Tomorrow I will talk about one other method to possibly go around the wash sale rules. Email me at bstonercpa@sbcglobal.net