Another ISO/RSU/ESPP wash sale question

Home Fairmark Forum Equity Compensation Another ISO/RSU/ESPP wash sale question

Viewing 3 posts - 1 through 3 (of 3 total)
  • Author
    Posts
  • #4869
    13Cargo
    Participant

    I think I got into some wash-sale issues because I have too many stock comp events, but wondering if I can get out of it by selling the same number of stocks that were purchased closed to loss event.

    Here’s the example:

    8/1 Exercise 500 ISO
    8/5 Exercise 300 ISO
    8/6 RSU vest 400
    8/7 ESPP 200
    8/9 Sold 600 company stock at a loss (old batch) = wash sale
    8/20 Exercise 300 ISO

    If I sell 600 stocks from the 8/6 RSU 400 and 8/7 ESPP 200 batches before end of year (total 600 = same number of capital loss sold on 8/9),do I avoid wash sale?

    • This topic was modified 3 weeks, 4 days ago by 13Cargo.
    #4895
    Kaye Thomas
    Moderator

    Selling a matching number of shares by the end of the year doesn’t avoid a wash sale. In the right circumstances, it may give you the same result as if a wash sale had not occurred, but you still have to report a wash sale and make the appropriate adjustment as to the shares you sold later.

    The wash sale regulations have matching rules that generally require us to work chronologically when there are multiple batches that can be paired with a single sale. Unfortunately, in your example this would mean the shares that match are the 500 ISO shares you bought on 8/1 and 100 of the ISO shares you bought on 8/5. According to those regs, the wash sale adjustment (added basis) would apply to those shares, and you would have to sell those shares to get the resulting loss. Doing this by the end of the year would require you to forgo the potential tax benefit of holding ISO shares.

    #4896
    13Cargo
    Participant

    Thanks. Very clear answer! If I switch the lot I sold (from old lot to RSU and Espp acquired on 8/6 and 8/7) at a gain, that should get me out of wash sale? Understanding that I have to keep good records as brokerage report of basis/dates will not match.

    • This reply was modified 3 weeks, 1 day ago by 13Cargo.
    • This reply was modified 3 weeks, 1 day ago by 13Cargo.
Viewing 3 posts - 1 through 3 (of 3 total)
  • You must be logged in to reply to this topic.