- quote -

It would get hit by a market maker a lot faster, if the
price is too high.

- quote -

Yes, it is; you're dealing off-market with your IRA.

- quote -

It isn't self-dealing if both transactions are made on the
market, with anonymous counterparties.

Seth

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- quote -

Seth, I don't know if you trade, but you could post a ask on
a OTM futures option in the IRa account and hit the ask in
your non-IRA account. So that's how you would move $100,000
into an IRA. I never said what you think I meant. See
previous posts. My concern here is whether this is
self-dealing and from my reading of the regs, I now think it
is. But it sure isn't explicit and in some cases it may not
be. Typical.

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nickr wrote:
- quote -

Since I believe that the wash sale rule does not apply, I
think you just report the loss on schedule D.

Remember that I am not expert, but I don't remember an
expert posting case law or rulings on this.

However if you are did the self-dealing that I suspect might
be involved in the original scenario, I don't know where to
confess that. You or your lawyer could come clean and try to
make a settlement. It may be considered a distribution from
your IRA.

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nickr wrote:

- quote -

The loss in the taxable account is disallowed. But the loss
is not lost, logic would say that your IRA basis has just
gone up by the amount of that loss. I've asked this question
in the past and the answer is not spelled out by the IRS.
But consider, the taxable account no longer owns the stock.
So the only place to add the loss to your cost is in the
IRA, in effect creating a dollar value of post tax money.
I'd like to hear if here are any other suggestions how to
handle.

JOE

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DF2 <replyvia[at]newsgroup_please.com> wrote:
- quote -

How does one properly report a wash sale when the gain is in
an IRA and the loss is in a taxible account? Does one simple
report the gain and thus make the IRA a taxable rather than
tax-deferred instrument? What about future gains, dividends,
et-cetera on the position in the IRA? Are they taxible, too?
For how long? Even taking a one-time tax hit on a gain might
be worth it if the after-tax money can grow tax- deferred
for 20-30 years, no?

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wrote:

- quote -

Wash sales are perfectly legal. The only issue is the
deduction.

However, if you knew a way to do a trade in your IRA that
would gain $100,000 and the reverse trade in your outside
account that would lose $100,000, why not just do the trade
in your IRA and get rich?

Seth

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nickr wrote:

- quote -

I assume that whether the wash sale rules include looking at
IRA transactions is a high-visibility thing. If the IRS
thought that a person who's IRA reinvested a dividend in GM
would be prohibited from taking a loss on a GM share sale
within 30 days of that dividend, they would not be shy about
saying so.

Yet some others come to a different conclusion.

- quote -

I think that taking the loss there is fine, tho this could
come closer to being thought of as self dealing. I would
not interpret your simple act as being the "Advanced
trading" that garagecapital proposed. I am assuming that
the trades you described were such that they would be
unlikely to be trades between you and your IRA.
Advanced/clever strategies in this area raises my
suspicions.

See the discussions on self dealing:
http://www.trustetc.com/investment/p...nsactions.html
http://www.google.com/search?hl=en&q...22&btnG=Search

- quote -

Wash sales are not illegal. Not properly reporting them as
such would be.

My opinions in tax rules are non-expert.

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DF2 <replyvia[at]newsgroup_please.com> wrote:
- quote -

Ok, let's assume the issue is vague with the IRS on the wash
sales. But what if taking the tax-deduction on the loss
wasn't the reason for making the trades? Suppose all you
wantd to do was take $100,000 from a non-IRA account and put
it in your IRA account. Wouldn't offsetting trades do this
and since you're not going to tax the tax deduction the wash
sale rule doesn't apply. You're not trying to tax a tax
deduction but merely move funds into a tax-deferred account.
Or are wash sales illegal even if you don't take the tax
deduction?

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garagecapital[at]gmail.com wrote:

- quote -

I don't think this is the typical question. The typical
question would be along the lines that you take a loss in
the regular account, and a few days later you buy the same
security in an IRA account. People differ on that, and I am
one who believes that is allowed without being having a wash
sale.

This descriptions sounds like you are figuring out how to do
trades where you and your IRA are probable buyers and
sellers of the same trades. If you are coordinating the
trades between the account for effect, I think that would be
a very different situation. You appear to be describing what
I think would be clearly disallowed. Your last sentence
hints at something that I expect is illegal.

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<garagecapital[at]gmail.com> wrote:

- quote -

If you could make money in the IRA with little risk, why not
just do that and don't bother losing money in the other
account?

Seth

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garagecapital[at]gmail.com writes:

- quote -

This is one of the perennial arguments here and in
other online tax fora.

You will find some people who say it is kosher

You will find some people who say it's a wash sale.

You will find some people (such as Kaye Thomas over
at fairmark.com) who say it's a related-party sale
(so even worse than a wash sale).

--
Rich Carreiro rlcarr[at]animato.arlington.ma.us

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garagecapital[at]gmail.com wrote:

- quote -

I've considered similar whacky schemes. This is the 'Lucy
Ricardo' of investing. If you buy X within 30 days (before
or after) of a loss on X in a different account, you have a
wash sale problem. The use of an IRA doesn't change that,
per http://www.fairmark.com/capgain/wash/wsira.htm In the
end, when I am doing my year end planning, if I have a stock
I wish to use for a tax loss, I double up in November, and
sell the shares for the loss in December. I'd be curious to
see if any other replies contradict this. I believe
Fairmark's interpretation is accurate.

JOE

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<garagecapital[at]gmail.com> wrote:

- quote -

The issue of whether replacement assets in an IRA can create
a wash sale outside the IRA is unsettled. I've seen good
arguments both ways. IRS hasn't taken any formal position,
and AFAIK the issue hasn't been litigated.

I say, "Go for it" with full disclosure. It would be nice
to see this litigated and settled.

--
Phil Marti
Clarksburg, MD

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Let's say I had an IRA with $100K and a non-IRA brokerage
account with $100K and my aim, for tax purposes was to
generate losses in the non- IRA account but have off-setting
positions in the IRA. (I would generally do this with
futures options, btw.) I risk an accidental taxable gain
offset if the Non-IRA profits and the IRA loses, and the
latter , effectively, wipes out my gain. But in the inverse,
if my IRA positions go up, I get a tax-deferred gain and a
taxable loss in the non-IRA -- plus I have -- effectively --
moved money from a taxable to a tax-deffered account. What's
wrong with this scenario, besides the risk I already stated?
Is there a legal issue I am unaware of? Seems to me if you
do your probabilities correct and write futures options
naked in the IRa and buy them in the non-IRA, you could --
effctively -- money money into an IRA, with little risk, no?

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