Yesterday I talked a little about the wash sale rules when selling stock. I also linked an article that had a couple of solutions around the 30 calendar day limit to buy back a stock.There is one other trick you can use to get around the wash sale rules, but it requires you to have some cash available and do some forward planning. You need at least the amount of money available to buy another block of shares that is the same number as what you already own.You buy an amount of the same stock you already own that you are thinking of selling 30 days before you are planning to sell it (called doubling up on a stock). Say you own 100 shares, now you own 200 shares. You now have to wait 30 days then sell your original block of 100 shares. If the stock did nothing in the 30 days, you now have your capital loss. If you stock went up during that time, you have made back some money on the stock without missing out on the potenial big gain you were thinking was going to happen (you already have an upturn from when you were going to [...]
Brian’s Financial Musings
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.cfmTomorrow I will talk about one other method to possibly go around the wash sale rules. Email me at bstonercpa@sbcglobal.net
Brian’s Tax Musings
Here is a two-fold method to save for your child’s future while getting a deduction for your sole proprietorship now. If you have a child who is at least 13 you can you can pay them while they do simple office work like filing or typing or cleaning (especially if you already give them an allowance and they want a raise). You can deduct the full salary on your sole proprietorship and not pay social security, medicare and unemployment insurance taxes on your child under age 18. If you pay them under $5,800 they will not owe federal or state income taxes in 2011. Email me at bstonercpa@sbcglobal.net and we can discuss this further and map out a strategy to save some taxes.