What can an investor do to plan around the wash sale rule?
While no technique is completely “safe”, the following are some ideas to consider: • Most obviously, an investor can sell the stock or security and wait at least 31 days before buying it again. The risk here is that the stock or security may rise in price before the investor can repurchase it. In other words, the investor should watch the calendar carefully! • If the stock or security has a strong tendency to move in tandem with some other stock, the investor may be able to reduce the risk of missing a big gain by purchasing a stock in a different company as a “replacement” stock or a different security. This would not be considered a wash sale because the stocks are not substantially identical. To summarize, there in no risk-free way to get around the wash sale rule. But at the same time, continuing to hold onto a capital asset that has lost value is also not risk-free. In the end, an investor has to evaluate all risks and balance these risks against the benefit an investor will recei
