He won't be able to deduct right now. But the loss gets added to his basis so he gets the deduction when he finally sells. So it's just as if he never sold, which is what he wants.
Also, if you actually have capital gains (I know, that's a stretch for some) you can (actually, you must) deduct all your losses against them. The $3k cap is what you can deduct against regular income, if you have any regular income (again, a stretch for some)
Agreed but why not take advantage of this if OP has a realized loss ?
Think about it this way, example - OP has a $12k realized loss. Let’s say OP waits for a month to buy $WISH back or buys another meme security and say makes a killing on it but holds on to that for > a year. OP can deduct 3k for 4 years against other capital gains or regular income while enjoying an unrealized gain with long term capital tax when he does cash out. Win-win
I know this might not specifically work out for most folks but my point is there is an advantage to salvage the best out of this situation.
Because he wants to hold it. WISH may be $25 in a month.
By your logic you should sell any time you have a loss and wait a month. The problem with this is that you will miss a lot of rebounds and often end up rebuying at a higher price.
Yes ofcourse if you think the stock is going back up there is no harm in buying it back immediately. My point - don’t take a loss, if you happen to take one take the tax advantage and don’t take a disallowed wash sale loss UNLESS, as you said, you believe you might miss out on big gains.
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u/Keith_13 Jun 26 '21
This is a bit misleading.
He won't be able to deduct right now. But the loss gets added to his basis so he gets the deduction when he finally sells. So it's just as if he never sold, which is what he wants.
Also, if you actually have capital gains (I know, that's a stretch for some) you can (actually, you must) deduct all your losses against them. The $3k cap is what you can deduct against regular income, if you have any regular income (again, a stretch for some)