Wash sale rule question
Yes. On December 10, you have a wash sale. As long as you don't buy the stock back for 30 days after that, the wash is of no consequence. In other words, you don't have a wash issue if you don't own the stock for 30 days.
The harvested losses are capital losses.  See this IRS page: Generally, realized capital losses are first offset against realized capital gains.  Any excess losses can be deducted against ordinary income up to $3,000 ($1,500 if married filing separately) on line 13 of Form 1040.  Losses in excess of this limit can be carried forward to later years to reduce capital gains or ordinary income until the balance of these losses is used up. This means that your harvested losses can be used to offset ordinary income --- up to $3000 in a single year, and with extra losses carried forward to future years.  It is pretty close to a free lunch, provided that you have some losses somewhere in your portfolio. This free lunch is available to anyone, but for a human, it can be quite a chore to decide when to sell what, keep track of the losses, and avoid the wash sale rules.  The advantage of robo-advisors is that they eat that kind of bookkeeping for breakfast, so they can take advantage of tax loss harvesting opportunities that would be too cumbersome for a human to bother with. I realize this is a dated question, but for anyone interested in this subject please be aware of the availability of IRC § 1235 and capital gain treatment for the sale of patents.  When the holder of a patent transfers all substantial rights to an unrelated person, it can qualify for long-term capital gain treatment.  That can be a meaningful tax savings relative to ordinary income treatment. There are a number of specific provisions and requirements to access § 1235.  The holder must be the creator or someone unrelated (and not the creator's employer) who purchased the patent from the creator.  The holder must transfer all substantial rights to the patent (not a licensing), or sell an undivided portion of all substantial rights (partial sale, again not a license).  The benefit of § 1235 is that long-term treatment will apply even for patents with holding periods under 1 year.  Other rules and permutations of course also apply.  Those who fail § 1235 may still qualify their assets as capital under § 1221 or § 1231.  A patent held by its creator will often qualify as a capital asset. It may not make any sense to sell your business as a whole, particularly if all a purchaser wants is a patent or group of patents.  Of course, if the patent was held by its creator in a single-member LLC or other disregarded entity sold to a buyer, then the tax treatment is still treated as the sale of a long-term capital asset. You add the wash sale loss to your cost basis for the other transaction so you would have two entries in your schedule d reporting 1.) Listing the $2000 loss as a wash 2.) The cost basis for your second transaction is thus $1000+$2000 = $3000 so when it was sold for $2000 you now have a reportable loss of $1000. For more information see here.... http://www.ehow.com/how_5313540_calculate-wash-sale.html Yes. As long as the stock is in a taxable account (i.e. not a tax deferred retirement account) you'll pay gain on the profit regardless of subsequent purchases.  If the sale is a loss, however, you'll risk delaying the claim for the loss if you repurchase identical shares within 30 days of that sale. This is called a wash sale. Is wash rule applicable for this? No - because you made a gain on the sale.  You paid $13,500 for the stock and sold it for $14,250.   The wash rule prevents you from claiming a loss if you buy the same stock again within 30 days.  You have no loss to claim, so the rule does not apply. "For restricted stock, I think the vesting date meets the requirements of the second wash sale trigger from IRS Pub 550: Wash Sales: Acquire substantially identical stock or securities in a fully taxable trade I base this on these two quotes from IRS Pub 525: Restricted Property: any income from the property, or the right to use the property, is included in your income as additional compensation in the year you receive the income or have the right to use the property. - Until the property becomes substantially vested, it is owned by the person who makes the transfer to you, usually your employer.  So on the vest date: The transfer is taxable Ownership is transferred to you That seems close enough to ""a fully taxable trade"" for me.  Maybe this changes if you pay the tax on the stock on the grant date. See Pub 525: Restricted Property: Choosing to include in income for year of transfer. Obviously, if this is important you should consult your tax advisor.  Technicalities aside, I don't think it passes the sniff test. You're getting salable shares when the restricted stock vests. If you're selling other shares at a loss within 30 days of the vesting date, that smells like a wash sale to me." "The IRS has been particularly vague about the ""substantially identical"" investment part of the wash rule.  Many brokers, Schwab for instance, say that only identical CUSIPs (exactly the same ETF) matter for the wash rule in their internal calculations, but warn that the IRS might consider two ETFs over the same index to be substantially identical.  In your case, the broker has chosen to call these a wash despite even having different underlying indices.  Talking to the broker is the first step as they will report it to the IRS.  Though technically you have the final say in your taxes about the cost basis,  discussing this with the IRS could be rather painful. First though it is probably worth checking with your broker about exactly what happened.  There are other wash sale triggers that frequently trip people up that may have been in play here." You should read into the local and Federal laws that concern these kinds of sales. Potential pitfalls that I know of (there are probably much more): Auctions in general mean: