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I have stocks of a company that come every single month. How should I sell the stocks and avoid wash sale? Which lots should I sell?

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    Are these stocks received as income or are you buying them? What's the consequence of a wash sale that you';re trying to avoid?
    – D Stanley
    Oct 17, 2022 at 14:12
  • Would it be possible to delay, and/or advance, some lot(s) to create a gap? (You would need to plan the timing.) For example I normally leave mutual funds on 'reinvest' distributions but if I want to sell when I have down or mixed lots I might switch to 'cash' for a few months and then switch back. Oct 19, 2022 at 1:28

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If you receive stocks as compensation every 30 days, then any sale at a loss would be within 30 days of an acquisition and would be considered a wash sale. Any sale that resulted in a gain would still be taxable in that year.

However, all that means is that the tax benefit of those losses is deferred until you ultimately close out your position. The loss is just shifted to the cost basis of the most recent purchase. The loss is not "gone" forever.

The purpose of the wash sale rule is to prevent tax loss harvesting by deferring tax losses until your position is closed, but that does not seem to be your intent. I would talk with a tax attorney that deals with wash sale rules and see if there are precedents that would indicate that regularly acquired lots that prevent any 30-day window would be exempt.

But in the end, all you're doing is deferring the loss; you'll be able to claim it eventually.

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    Any sale at a loss would be within 30 days of an acquisition and thus a wash sale; if you have (enough) 'up' lots, you could sell (some of) them and avoid the wash sale rule -- but you would pay tax on the realized gains (unless offset by other non-wash losses, or long-term and within the 0% bracket) Oct 19, 2022 at 1:23
  • "then any sale at a loss would be within 30 days of an acquisition and would be considered a wash sale." Not any sale. Any sale less than the acquisition ("less" referring to quantity, not price). Oct 22, 2022 at 4:10
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You should sell the stocks in the lot that will result in the least amount of taxes. To avoid a wash sale, you should sell the stocks in a different order each month.

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More or less stock bought than sold. If the number of shares of substantially identical stock or securities you buy within 30 days before or after the sale is either more or less than the number of shares you sold, you must determine the particular shares to which the wash sale rules apply. You do this by matching the shares bought with an unequal number of shares sold. Match the shares bought in the same order you bought them, beginning with the first shares bought. The shares or securities so matched are subject to the wash sale rules.

IRS publication 550 page 56

So suppose you get 100 shares each month. If you sell 300 shares, then what happens first is that the 100 oldest shares that you have will be considered to be sold, and the wash sale rule will apply to them. For the other 200 shares, the wash sale rule will not apply, and you can claim a loss on them.

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