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.