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Today I wanted to buy a few shares of Apple (AAPL), let's say 10 shares.

When I handled the UI, there was the "By number of shares" and "By dollar amount" and then "Market" and "Limit" price, and I clicked this and that, and it didn't accept the order (might have put in 1000 to mean $1000 but the label was "Number of Shares").

So I corrected some mistake and it allowed it to go through, but when it completed, I saw it was a "Sell" order. I am not sure if I clicked on the wrong place by mistake or if I tapped the Tab or space button by mistake. Mistakes happen.

So immediately, I bought 20 shares (to buy back the 10 shares and buy the 10 shares I originally wanted to buy), to correct the mistake. (Update to clarify: I owned more than 10 shares of Apple before I made the mistake). This happened in my 401k account, so I think that sale was not subject to capital gain tax. But what if it happened in my individual account? Then that sale will be subject to capital gain tax for this current year? Is there a way to claim it was a mistake and within 2 minutes, I bought it back, or by some other method, it won't be subject to capital gain tax?

P.S. Update 2021 Apr 14: I just thought of something: since the IRS really would not care what minute and second you bought and sold the stock at, as long as it is the same day (and it was a mistake, really), so could we consider this: we bought the 10 shares of Apple, and sold it immediately either gaining $0.01 or losing $0.01, so we have close to $0 tax consequence for those 10 shares. And the other 10 shares, it was then just considered to be new investment. Then in this case, it is as if the mistake didn't happen.

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    You did a "fat thumb" as they say! – Fattie Apr 6 at 11:17
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    it is really true... on the MacBook Air, I clicked with the thumb... on the PC, I used a mouse, so I used the index finger – nonopolarity Apr 6 at 15:07
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    Wait, you're trading individual stocks in your 401k? – Glen Yates Apr 6 at 17:27
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    you'll pay the tax, deal with it and move on – Aksakal almost surely binary Apr 6 at 18:31
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    @GlenYates yes, it is allowed... I am not sure if it is allowed for many companies... for some companies, they allow it and using Fidelity, they set up a "Brokerage Link" and it is for 401k stock investments – nonopolarity Apr 6 at 21:21
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The only way this could work is if you convince your broker that there was a malfunction in their site/app and they agree to adjust their records as if you had not sold the stock. If you have a good case, they might be more likely to agree to this since the trade was immediately reversed, so what you're asking for wouldn't cost them much (compared to someone who's claiming that a malfunction led to an outright loss and is seeking reimbursement for that loss).

Otherwise, if you made an unintended trade by your own mistake in a taxable account, your 1099-B will show that trade and you will be stuck with the tax consequences (in this case, a taxable gain -- there is no "wash sale" gain exclusion). You'd just have to look at the bright side, that the shares you repurchased have a higher basis now and you will owe less tax in the future.

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    yes, I thought about the "higher base" situation too... so if there was a year my tax bracket is low, or if I decide to go back to school and for the year I will have no income, then I really could sell about $20,000 worth of stock, and repurchase it immediately. This way, the maximum gain is $20,000 and is not subject to tax, and now I have a higher base. (the $20,000 I am not sure... will have to double check for the standard deduction and the tax brackets) – nonopolarity Apr 6 at 9:55
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    Definitely understand what a "wash sale" implies because it's a regulation specifically made to prevent people from doing these tax schemes. As an aside, there's a similar rule in the UK called "bed and breakfast" that treats re-purchases within a month as a special case. If you were in the UK and re-bought the shares at the exact same price within a month, this rule would actually leave you without any tax to pay but also the same cost basis as before the re-purchase. – csiz Apr 6 at 15:08
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    @csiz: Wash sale rules only apply if the sale realizes a loss instead of a gain, though. – user2357112 supports Monica Apr 6 at 16:07
  • I actually got my brokerage to do a correction once, but it wasn't a "buy+sell" situation. I accidentally sold shares in a custodial account, not my main account. I immediately drove to their office, they put me on the phone with someone in the main corporate offices, and they were able to adjust it as I had enough shares of that same stock. But it meant that I took the capital gains, and not my nephew. – Joe Apr 7 at 16:40
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    @PhilipRego That is exactly what the "wash sale" rules are designed to prevent. They are asymmetric (losses are excluded/deferred but gains are not). – nanoman Apr 7 at 18:31
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It depends. If the 10 shares you sold were sold at a loss, then buying back those 10 shares immediately after, results in a wash sale, in which case there is no tax consequence. If the 10 shares you sold were sold at a profit, then you will owe capital gains taxes on those profits when you file your taxes.

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Based on your comments, let's be clear about what happened:

  1. When you accidentally sold the 10 shares by mistake, you sold them short.
  2. When you subsequently bought 20 shares, this is really two trades:
    a. A cover: you covered your short position of 10 shares, and...
    b. A buy: you went long 10 shares.</br/>

In a short position, you make money when the price goes down. In that moment between your sort sale and cover, if the price of AAPL went down, then you made money. If so, you'll pay ordinary income tax rates (as nanoman says below) because you bought and sold within a year. If you hold for a year or more, you pay a 20% capital gains tax.

If AAPL went up, you lost money, and may be able to take a tax deduction.

This assumes U.S.A. law.

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    1. An interesting idea about going short, but I assumed OP's scenario started out with already owning at least 10 shares of AAPL. I assumed this because it was inspired by something that happened in a 401(k) and I doubt shorting would be allowed there. 2. "must pay capital gains if you buy and sell an instrument within one year" -- I think you mean must pay ordinary income tax rates on such capital gains. Holding longer than one year is still called capital gains but has a reduced tax rate. – nanoman Apr 7 at 6:41
  • @nanoman 1. He made no mention of having an existing position. 2. I pulled this statement because I'm unsure of my facts, but I agree with your statement. – kmiklas Apr 7 at 6:52
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    While he didn't mention an existing position, I don't think most brokerages would allow you to sell short without going through extra steps. I don't think I've ever seen it on the ordinary buy/sell page. – Barmar Apr 7 at 14:49
  • YES, I did own Apple stocks already... that's why I said "to buy it back"... I am not sure if 401k account allows me to sell short... also if I sell short and immediately cover, I assume there wouldn't be any capital gain tax (because the stock price hardly changed)... but then, it is a good point, can i claim that I sold it short and covered right away, so there should be no capital gain tax? But I heard you have to specify what you are selling (the one bought 1 year ago or 2 years ago) if you want to specify the cost basis (and I assume the same for short selling). – nonopolarity Apr 11 at 0:44
  • @nonopolarity 1. "buy it back" could also mean you covered after shorting. 2. Agreed--very unlikely that short sales allowed in a 401k, but you phrased the OP as, "in my personal account," or NOT your 401k. 3. If you made a profit, you'll pay the full taxable amount (33%). You only pay capital gains tax (20%) if you hold for a year or more. – kmiklas Apr 11 at 3:31
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this makes no sense to me. Why would you have to pay any kind of tax on it unless you actually take a disbursement??? I trade my IRA and trade all kinds of stocks, but as long as it all stays in the investment account and not in your bank or your pocket, you shouldn't have to pay any taxes. You can buy and sell shares within your account all you want. When you sell shares, the money doesn't go into your pocket, it goes basically into just another position which some people call "cash" but it's not cash, it's probably some type of bonds that are highly liquid and stable and pretty much hold value just like cash. at least that's my understanding. You only pay taxes when you cash out (as in actually withdraw cash from the account)

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    The question was predicated on "But what if it happened in my individual [taxable] account?" – nanoman Apr 7 at 18:29
  • don't worry, one of the joy of using Internet seems to be telling other people "they don't make sense" – nonopolarity Apr 11 at 0:40

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