Page 28 - Means Wealth 2020/2021 Perspectives

WASH SALE RULES

n investor who has generated capital gains in 2020 may offset these
A gains by selling other securities that generate a capital loss. If your
capital losses exceed your capital gains, you may deduct your net loss dollar-
for-dollar against ordinary income up to $3,000 annually. Any excess capital
losses may be carried forward indefinitely to future tax years.

Remember, however, that the wash sale rule states that you may not take
a loss if, within a period beginning 30 days before you sell your security
and ending 30 days after that date (a period covering 61 days), you have
acquired the same or substantially identical securities. If a wash sale occurs,
your basis in the newly acquired stock is increased by the amount of any
disallowed loss on the original stock. The loss would then be deferred until
there is a sale or other disposition of the newly acquired stock. If you think
the stock within 30 days could sell at a higher price than it currently trades,
an alternative strategy would be to double up your stock position at least 31
days prior to your anticipated sale of stock and sell the original shares for a
loss 31 days later. Keep in mind for this year, your last day to double up on an
anticipated sale of stock was Monday, November 30 th . The last day to sell a
security for a loss will be Thursday, December 31 st . The first day you can buy
back after a December 31st sale is Monday, February 1 st , 2021. n

28