Suppose I sell a stock that is eligible for LTCG treatment; but I replace those shares within 30 days (same no of shs) and furthermore treat the gain/loss on the sale of those shs as a short term sale.

Q: Do those newly-bought shs immediately assume LTCG status?

Thank you!

  • First, since you're asking a legal question - you should include the country. Second, wash sale rules typically apply to sales at a loss, but not gain. – littleadv Feb 12 '15 at 17:06
  • Tax questions require a country be specified. – Chris W. Rea Feb 12 '15 at 18:07

Yes, the newly bought shares will have a long-term holding period, regardless of when you sell them. In addition, it's only a wash sale if you sold the first shares for a loss; it's not a wash sale if you sold them for a gain.

Wikipedia mentions this:

When a wash sale occurs, the holding period for the replacement stock includes the period you held the stock you sold.

Example: You've held shares of XYZ for 10 years. You sell it at a loss but then buy it back within the wash sale period. When you sell the replacement stock, your gain or loss will be long-term — no matter how soon you sell it.

Charles Schwab also mentions this:

Here's a quick example of a wash sale.

On 9/30/XX, you buy 500 shares of ABC at $10 per share. One year later the stock price starts to drop, and you sell all your shares at $9 per share on 10/4/XY. Two days later, on 10/6, ABC bottoms out at $8 and you buy 500 shares again. This series of trades triggers a wash sale.

The holding period of the original shares will be added to the holding period of the replacement shares, effectively leaving you with a long-term position.

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  • Why was this downvoted? – Elan Hasson Feb 5 at 18:04

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