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A newbie here! I have PayPal stock for over two years and my total return/losses is over -$2000 now. I bought and sold $700 of new stock a few days ago, for tiny profit, and I just found out about the WSR.

Please advise what is the best practice going forward to be able to use those $2000 in losses when filing my taxes.

-I'm currently in the same position I was in before the new purchase/sale (almost), and I still have around $2000 in losses. Even though my Robinhood status under my Paypal stock, for some weird reason, has reduced my "total return" to around $1000 from the actual $2000 that I have in losses, after this new purchase (Any thoughts why?).

-Does it help if I wait 30 days and sale everything and never buy it again lol.

-I found the info below online, if someone can translate it for me.

Thanks a lot.

".....You can't use the loss on the sale to offset gains or reduce taxable income. But, your loss is added to the cost basis of the new investment. The holding period of the investment you sold is also added to the holding period of the new investment. In the long run, there may be an upside to a higher cost basis—you may be able to realize a bigger loss when you sell your new investment or, if it goes up and you sell, you may owe less on the gain. The longer holding period may help you qualify for the long-term capital gains tax rate rather than the higher short-term rate...."

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Please advise what is the best practice going forward to be able to use those $2000 in losses when filing my taxes.

You won't be able to claim it on your 2023 taxes. If you sell the remaining shares this year, you can claim whatever loss you end up with on your 2024 taxes next year.

The purpose of the wash sale rule is to reduce Tax Loss Harvesting, where you sell at a loss to get a tax deduction (or offset gains) and immediately repurchase, so that you get a tax deduction earlier without affecting your position. The WSR defers the deduction until you sell all of your shares. If you sell everything within the same tax year, the WSR effectively cancels out.

The translation of the last paragraph is effectively:

You can't claim the loss now, but it will increase your cost basis of the new shares, reducing your gain by the same amount when you sell later.

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  • Thank you very much for the detailed response. Just to clarify, I will not be able to deduct my losses if I sale my entire position after 30 days of the last buy/sale?
    – joe w
    Feb 16 at 16:48
  • Not on your 2023 taxes because the sale happened in 2024. If you with 30 days, or sell it all this year, you can deduct it when you file for 2024. wash sales just defer the loss, it doesn't prevent it.
    – D Stanley
    Feb 16 at 16:53
  • Got it. Thank you! So, I can sale it now, and I don't have to wait the 30 days, is my slow understanding.
    – joe w
    Feb 16 at 17:22
  • Yes because you would have closed out your position in the same tax year. Technically the loss from the first sale is applied to the cost basis for the second sale, but mathematically it's the same result.
    – D Stanley
    Feb 16 at 17:24
  • Great! Thanks to you both D Stanley and Chris!
    – joe w
    Feb 16 at 21:59

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