At year-end, you may sell stocks or funds to realize capital losses, for tax purposes. After such sales, you might like to keep owning the securities you’ve sold. However, if you buy them back right away, your tax loss won’t count, under the wash-sale rules.
Possible tactics:
* Hold onto the sales proceeds for 31 days and then buy back the same security you sold. You’ll avoid tax problems but you’ll bear the risk that the stock or fund will shoot up while you’re waiting to get back in.
* Buy a similar but not identical security, one that will closely track your original holding. You can sell one bank stock, for example, and buy another. This will give you your tax loss yet let you participate if bank stocks move up sharply, right after you sell.