The answer given repeatedly above is absolutely the usual answer to this question. It's the answer that Fidelity's systems are programmed to follow. It's the answer that's supported by the text of Publication 550. And if you're ever audited, it's a good bet that it's the answer your auditor will believe.
But it's worth pointing out that it's not the only answer. There is another interpretation.
Kaye Thomas of Fairmark Press is a tax attorney and expert in this area. He's the author of books on capital gains, options, Roth accounts, and equity compensation. I'm not saying to follow his advice, but it's certainly advice from a knowledgeable source. He writes:
But it's worth pointing out that it's not the only answer. There is another interpretation.
Actually, no. US Code § 1091 says acquired "by purchase". Those extra words must mean something, or they wouldn't be there.The wash sale law uses the term “acquire”, not “buy”.
Kaye Thomas of Fairmark Press is a tax attorney and expert in this area. He's the author of books on capital gains, options, Roth accounts, and equity compensation. I'm not saying to follow his advice, but it's certainly advice from a knowledgeable source. He writes:
And when responding to a question about Publication 550:https://fairmark.com/forum/…
The wash sale rule applies when stock is acquired “by purchase or by an exchange on which the entire amount of gain or loss was recognized by law.” Your stock is acquired as compensation rather than by purchase, so the wash sale rule doesn’t apply.
I should note that there’s an old ruling in which the IRS says they think the wash sale rule does apply in this situation. That ruling is merely an opinion that you are free to ignore, and this is a case where it clearly should be ignored. It is contrary to the plain language of the statute and to the best of my knowledge has never been applied to anyone.
This language in Pub 550 is based on the old ruling I mentioned. I’m not sure whether this is a case where the language remains in the pub because someone at the IRS still believes the ruling makes sense, or is it there because no one has thought about the issue in the time since it was inserted many years ago. All I can say is that in my opinion the ruling, and the example you quote from the pub (which is based on the ruling), are contrary to the clear language of the law and can be ignored.
Statistics: Posted by ssel — Tue Nov 05, 2024 1:03 am — Replies 7 — Views 455