Timing The Sale On Lossing Stocks
   
  Wash Sale Rule

Under the “wash sale” rule that applies to the disposition of an asset when a loss is recognized,the IRS doesn’t permit taxpayers deduct the loss if they repurchase the same or identical investment during the 30 ­day period before or after the sale date.

Section 1202, Qualified Small Business Stock (QSBS)

Under 26 US §1202, taxpayer excludes 75% of the gain recognized from the sale or exchange of QSBS that is held more than five years on a qualified stock acquired on or before September 27, 2010 and after February 17, 2009 and 100% on qualifying stock acquired after September 27, 2010, and before Jan. 1, 2014.

Section 1244 (small business) stock

The loss from the sale of a qualified corporation may be used against ordinary income similar to net operation loss up to $50,000 for single filers and $100,000 for married filing jointly.
Tax Tip: Consider selling worthless stocks or losing stocks and repurchasing them 31 days later to avoid wash sale, if advisable. See the §§ 1202 and 1244 stocks explained below.

Tax Tip: The stock must be issued by domestic C corporation, originally issued after August 10, 1993, with total gross assets of $50 million or less, at least 80% of the value of the corporation’s assets was used in the active conduct of qualified businesses, held by non ­corporate taxpayer, held more than five years, etc. Application of this law may be complicated and need tax professional advice.

Tax Tip: To qualify as section 1244, stock must be issued by a domestic corporation, issued for money or other property. The total amount of money and other property received by the corporation for its stock as a contribution to capital and paid ­in surplus generally may not exceed $1 million, etc. This loss is claimed on Form 4797, not Schedule D.