Stock Wash Sales

I have "paper" loss on some stocks. At the end of the year, I want to sell some of them to offset the short gain I have from MSFT for the tax benefit. But I feel those stock will come back eventually and I plan to buy it back right away. Can I do it? Hmmm, IRA has a rule for it already - Wash Sales.

According to IRA Pub 550 Investment Income and Expenses, if you sell at a loss and have bought shares within 31 days before or after the sale date, it is a wash sale and you can't claim the loss. Instead, the amount of loss is added to the basis of the shares you bought (this even adds more complexity when you fill tax return).

But, the wash sale rules really only apply when the transactions bridge two tax years. You can trade all you want throughout the year, but if you close out your position prior to the end of the tax year and stay out for the required period of time, the wash sale issues are really not important. But, if you hold on to just one little share into the new tax year, you can look forward to making a bunch of wash sale computations. You'll get the benefit of the loss(es) when you sell the stock.

Wait, what if I have my wife to buy the stock in a separate brokerage account and I sell it from my account? (Am I smart?) IRA says: no no, I have that covered also! That doesn't work.

These sites have a few articles explaining these rule in detail:

http://www.fairmark.com/capgain/wash/
http://www.smartmoney.com/tax/capital/index.cfm?story=washrules

Or check out IRA pub 550: http://www.irs.gov/pub/irs-pdf/p550.pdf