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My question is similar to this question except that I would be buying the same stock within the wash-rule period. If I sell a stock at a profit, and then use that money to re-purchase the same stock at a lower price within 30 days, would I still have to report the money I made from the original sale for that tax year?

As an example:

I buy 100 shares of A for $1 in 2010
I sell all 100 shares of stock A for $2 in 2011 
I re-purchase 200 shares of A for $1 within 30 days

I've read about the wash rule, and somewhat understand that I can't report losses, but what about gains, is this a double standard?

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    The wash sale rule is not applicable if you are talking about a 90-day gap between sale and repurchase. But "within 90 days" could mean within 30 days in which case you cannot report the loss.
    – Dilip Sarwate
    Mar 27, 2013 at 22:15
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    I saw you update timeframe to 30 days. littleadv answer holds, the first rule for wash sale is that there must be a loss which is then disallowed due to a purchase within 30 days of the loss' sale. No loss, no wash.
    – JTP - Apologise to Monica ♦
    Mar 28, 2013 at 2:41
  • @JoeTaxpayer, thank you for your clarification. I misunderstood wash to mean repurchases that are made within a certain window. I did not realize that you have had to suffered a "loss" from the sale.
    – Tung
    Mar 28, 2013 at 2:55
  • It's not really a double standard. The wash rule disallows you from claiming a loss (i.e. prevents you from getting a potential tax advantage), so the same would hold by requiring you to report a gain.
    – Eric
    May 20, 2016 at 12:54

2 Answers 2

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Yes. Wash rules are only for losses.

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  • do you know if the stock I repurchase would still be considered long-term or short term in that case? If I sell that same stock a year later (after having repurchased it within that 30 day window), how would the capital gain be calculated? Would it be based the original price or the price I had purchased it for the second time around?
    – Tung
    Mar 28, 2013 at 2:52
  • @Tung - Neither. A wash sale takes the disallowed loss and adds it to the basis of the new shares. So the loss isn't lost forever just delayed until the new shares are also sold.
    – JTP - Apologise to Monica ♦
    Mar 28, 2013 at 3:00
  • If we're talking about your original scenario (sell with gain and buy at lower price later) then the prior position (the one you sold at gain) has no bearing at all even if you buy back the next minute. You start from scratch. If its a wash sale - then as Joe said.
    – littleadv
    Mar 28, 2013 at 4:27
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Yes, you would have to report the gain. It is not relevant that you traded the stock previously, you still made a profit on the trade-at-hand.

Imagine if for some reason this type of trade were exempt. Investors could follow the short term swings of volatile stocks completely tax-free.

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    The investors that trade volatile stocks very short term are called day traders. The losers fail, not for the 25% tax, but for the fact they don't quite know what they are doing.
    – JTP - Apologise to Monica ♦
    Mar 27, 2013 at 19:39

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