# Can I use losses to raise my tax basis?

Let us say I made a poor investment and lost 10K. Let us also say that I have not realized any profits in that tax year and don't need to draw on my investments. For the sake of argument let us also ignore deductions from ordinary income.

Let us say that I have 1000 shares of another stock that I bought for \$10 each. Since then the stock price has shot up to \$30. What are the tax implications of selling 500 shares at \$30 and then repurchasing them at the same price?

I'm guessing now I will have two lots of shares. Now if in some subsequent year the share price goes up to \$40 and now I want to take profits for real. I would be paying taxes on `500 ( \$40 - \$10 ) + 500 ( \$40 - \$30 ) = 500 ( \$30 + \$10 ) = \$20K` as opposed to `1000 ( \$40 - \$10 ) = \$30K`.

Is this correct, or is there something like a wash rule to prevent this sort of thing?

• I don't get it... What are the tax implications of selling 500 shares at \$30 and then repurchasing them at \$10? - are you expecting the stock to drop from \$30 to \$10? Feb 8 at 22:38
• Sorry, I meant to say the same price, corrected the question Feb 8 at 22:46
• Oh, so you're asking about tax loss harvesting :) Feb 8 at 22:55
• Your calculations is correct and there is no wash sale issue. Feb 9 at 0:16
• What country's tax laws are you asking about? There are country tags. Feb 9 at 1:56