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I've read horror stories about someone selling stock A for a loss in a traditional brokerage and rebuying the stock in an IRA. Their basis in their IRA does not ever adjust and they cannot ever realize the loss. However, imagine the following hypothetical scenario:

Someone buys 100 shares of Stock A in their traditional brokerage for $50 each, sells a month later for $25 each ($2500 loss). Then, one day later, they rebuy one or more shares Stock A for 26 dollars in their traditional brokerage. Then, the day after that, they buy Stock A in their IRA.

When they sell Stock A again in their traditional brokerage after 30 days, are they allowed to take the deferred loss, assuming they've sold in their IRA too? In other words, do you get to choose where you apply the deferred loss?

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The order you propose works, the wash process has the new shares bought in the traditional broker account taking on the lower basis, the deferred wash loss.

No issue buying more shares in the IRA after that.

If you flipped the timing the capital loss is not preserved as a future benefit.

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  • Does this require rebuying 100 or more shares to work correctly? Or if they only rebought 1 share, would it have a cost basis of $2526? – Craig W Jun 29 at 16:26
  • The wash offsets an equal number of shares. – JTP - Apologise to Monica Jun 29 at 19:46

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