Wash Sale Basis Where Does It Go - Taxable & IRA

[joesxm3]

As I understand it, if you do a wash sale, the loss that cannot be claimed immediately is added to the basis of your other shares.

If, in my taxable account, I buy 10 shares at $100 on Monday and 10 shares at $80 on Tuesday, then sell my 10 Monday shares on Wednesday for $80, giving a loss of $200 I cannot claim the loss. The $200 is added to the Tuesday shares, increasing the basis from $800 to $1000.

What happens if the Monday shares were in my taxable account and the Tuesday shares were in my IRA?

Would the loss be added to the basis of the Tuesday shares in the IRA, effectively preventing me from ever claiming the loss?

[cathy63]

The $100 just disappears. It doesn't move to your IRA. If it did, you'd be filing form 8606 to track the basis until your IRA was emptied.

Here's an Investopedia article on the subject: https://www.investopedia.com/article...-sale-rule.asp

Quote:

In 2008, the IRS issued "Revenue Ruling 2008-5," in which it addressed the question of whether the wash-sale rules apply to IRAs. In the ruling, the IRS explained that when shares are sold in a non-retirement account and substantially identical shares are purchased in an IRA within 30 days, the investor cannot claim tax losses for the sale, and the basis in the individual's IRA is not increased.

The official source they give for this info is here (I did not read it): https://www.irs.gov/pub/irs-drop/rr-08-05.pdf

[joesxm3]

Thanks. I thought that might be the case.