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Suppose I buy 10 shares of XXXX at $300 in my IRA account on Jan 2nd for total $3,007.

XXXX drops to $250 on Jan 10th and I then buy 10 shares in my taxable account for a cost of $2,507.

On Jan 15th the stock rises to $275 and I sell the 10 XXXX in my IRA account for $2,742.

No further XXXX trades are made for the next year and no trades are made for the 2 months prior to Jan 2nd of year X.

Since the IRA is taxed at the time of withdrawal (many years from now), do I have any tax implication with regard to wash sale?

  • Wash sales don't have any effect on an IRA, because IRA taxation is the same for all distributions -- "taxable basis" in the IRA matters, but investment cost basis does not. The problem with IRAs and wash sales is that if you wash by selling outside and buying inside, the opportunity to claim the loss in the taxable account disappears forever. – Ben Voigt Jul 25 '19 at 19:31
  • Yes, but he sold inside and bought outside, which changes his cost basis in the other account, right ? – xyious Jul 25 '19 at 19:34
  • @ben-voigt so as I have sold inside ( of IRA) and bought outside( i.e regular account), there is no effect on Taxes / Wash sale ? – Neil Jul 25 '19 at 19:36
  • It is the other way of money.stackexchange.com/questions/21450 – Neil Jul 25 '19 at 19:58
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    I'll leave these comments for a bit before cleaning them up, but I think @BobBaerker's answer covers them. – GS - Apologise to Monica Jul 25 '19 at 20:58
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IRA trades can trigger a wash sale in a taxable account but not the other way around.

Per Investopedia:

In 2008, the IRS issued Revenue Ruling 2008-5, in which it addressed the question of whether the wash-sale rules apply to IRAs. In this ruling, the IRS explained that when shares are sold in a non-retirement account and substantially identical shares are purchased in an IRA within 30 days, the investor cannot claim tax losses for the sale, and the basis in the individual's IRA is not increased.

Example - Claiming Tax Losses in an IRA

Suppose that you own 100 shares of YYY stock with a basis of $1,000 in your brokerage account. You sell the 100 shares of YYY at a loss, for $400 on October 10.

On November 1, you buy 100 shares of YYY stock in your IRA account for $800.

According to Revenue Ruling 2008-5, you cannot deduct the $600 loss on the sale, and you cannot increase the basis of the stock purchased in your IRA by the $200 difference between the sell and repurchase.

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