r/stocks
Question on wash sale rule
User asks if a disallowed wash sale loss can be added to the cost basis of remaining shares in a taxable account.
I read that if you make a wash sale in a taxable brokerage account and buy the same stock in a tax-advantaged IRA, the wash rule says that the loss in the taxable brokerage account is now permanently disallowed. The stated reason being is that the disallowed loss can’t be added to the cost basis of your position in your IRA.
However, let’s say you didn’t completely liquidate your position in the taxable brokerage. Can the disallowed loss be added to the cost basis of that position and deferred until later?
It can be added to the cost basis of any shares in taxable that you purchased in the 30 days before you sold (since the wash sale rule is "before or after"), but not any shares you've held for more than 30 days at the time you sold.
I see, so let’s do an example:
Buy 2 shares in taxable. Buy 1 share in IRA. Sell 1 share in taxable at a loss. Cost basis is added to my 1 remaining share in taxable.
All done within the wash sale period.