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Date:   Mon, 06 Jun 2005
From:   Dalbir

I exercised stock options through a brokerage account. The shares were bought and sold on the same day. Were these wash sales?

Thanks,
Dalbir

Answer

Date:   June 10, 2005

Hello Dalbir,

To be a wash sale, shares are sold at a loss and identical shares are purchased during the period starting 30 days before the sale and ending 30 days after the sale. The loss is disallowed and a basis adjustment is made for the replacement shares. There are more serious consequences for incentive stock options that I won't explain here.

If you can keep other transactions outside of the wash sale "window" most same-day sales shouldn't be wash sales.

Good luck!

Mike Gray

For more information about incentive stock options, request our free report, Incentive Stock Options - Executive Tax and Financial Planning Strategies.

IRS Circular 230 Disclosure: As required by U.S. Treasury Regulations, you are hereby advised that any written tax advice contained in this answer was not written or intended to be used (and cannot be used) by any taxpayer for the purpose of avoiding penalties that may be imposed under the U.S. Internal Revenue Code.