I was told that if you sell all your holdings in a stock that included wash sales before the end of the year that your losses will no longer be considered deferred. Is this true? ============ Your tax loss I mean capital loss, is disallowed if, within the period beginning 30 days before the date of the loss sale and ending 30 days after that date, you acquire ?substantially identical? stocks or securities.
Also, the holding period of the wash sale securities is added to the holding period of the replacement securities, which increases your odds of qualifying for the favorable tax rate (15% for most folks under the current rules) on long-term capital gains.
At that point, on your taxes, you can claim those losses as capital loss?
=========================== your disallowed loss doesn?t just go up in smoke. Instead, it gets added to the basis of the replacement securities. When you sell them, your disallowed loss effectively reduces your gain or increases your loss on that transaction.Say you purchased 100 shares of A Co. on Dec. 1, 2016, for $2k. On April 1, 2017, you sell the shares for $1.2k, thus incurring an $800 short-term loss. But on April 6, 2017, you have a change of heart and buy back 100 shares for $1.3k. Your $800 loss is disallowed, but it gets added to the basis of the replacement shares. So your basis becomes $2.1k I men, $1.3k plus the $800 disallowed loss. In addition, the holding period for the replacement shares includes the Dec. 2, 2016, through April 1, 2017, holding period of the shares for which the loss was disallowed. When you file your 2017 return,you need to report the wash sale on Form 8949, which feeds into Sch D of 1040, since it was a short-term transaction.