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Suppose I buy 10 shares of XXXX at $300 in my IRA account on Jan 2nd for total $3,007.

XXXX drops to $250 on Jan 10th and I then buy 10 shares in my taxable account for a cost of $2,507.

On Jan 15th the stock rises to $275 and I sell the 10 XXXX in my IRA account for $2,742.

No further XXXX trades are made for the next year and no trades are made for the 2 months prior to Jan 2nd of year X.

Since the IRA is taxed at the time of withdrawal (many years from now), do I have any tax implication with regard to wash sale?

Neil
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1 Answers1

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IRA trades can trigger a wash sale in a taxable account but not the other way around.

Per Investopedia:

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 this 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.

Example - Claiming Tax Losses in an IRA

Suppose that you own 100 shares of YYY stock with a basis of $1,000 in your brokerage account. You sell the 100 shares of YYY at a loss, for $400 on October 10.

On November 1, you buy 100 shares of YYY stock in your IRA account for $800.

According to Revenue Ruling 2008-5, you cannot deduct the $600 loss on the sale, and you cannot increase the basis of the stock purchased in your IRA by the $200 difference between the sell and repurchase.

Bob Baerker
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