• 0 Vote(s) - 0 Average
  • 1
  • 2
  • 3
  • 4
  • 5

Wash Rule details

As we get later into the year I have been looking at selling some positions for tax losses. I have a couple of questions.
  • I added some additional shares of AT&T at the end of October. I DRIP all of my dividends and wanted to know if this stock counts toward establishing the 30 day period or not.

  • Depending on the answer above, in my IRA account I own T, VZ & CTL and currently DRIP all dividends. Do these 'stock purchases' count toward the wash rule?  
Yes, reinvested dividends count as a “purchase“ for the wash-sale rules; I discovered this the hard way early on in investing in dividend-paying stocks (and always having the dividends reinvested). When I saw the sale listed as a wash sale, I called Fidelity to inquire about this, and that’s what they told me — and what Fidelity reports to the IRS is the same thing.

Ever since then, if I’ve wanted to take a tax loss on a dividend-paying stock (in which I’ve had the dividends reinvested), I either wait for 31 days after the date of the last dividend reinvestment (the lot date of the stock received as the reinvestment), or I plan further ahead and turn off the dividend reinvestment for that stock (in all accounts, if I hold the stock in more than one account, such as my taxable account and an IRA). If you sell a stock in your taxable account, at a loss, and you hold the SAME stock in another account such as an IRA or Roth IRA, and you have the dividends reinvested in the stock in the IRA/ Roth IRA, that’s still a purchase — the wash sale rule looks at all your transactions across all accounts.
Thanks, that makes my planning a little clearer
If applicable, the same securities held in your spouses account could be affected by the wash sale rule.

From Investopedia:

The wash-sale rule applies to all investment accounts you own or control, including your spouse's account. Be sure to keep the lines of communication open between you and your spouse about trades in your portfolios for this exact reason.

Forum Jump:

Users browsing this thread: 1 Guest(s)