TLH and joint accounts

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Raspberry-503
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TLH and joint accounts

Post by Raspberry-503 »

We have a joint taxable account and each of us has an IRA (well, I have 2, a rollover and a Roth, my wife has a rollover)

IRAs are considered individual, but since the taxable account is joint, i need to watch both IRAs to avoid wash sales during Tax Loss Harvesting, right?
ruud
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Re: TLH and joint accounts

Post by ruud »

This is what IRS publication 550 says on the matter:
A wash sale occurs when you sell or trade stock or securities at a loss and within 30 days before or after the sale you:
  • Buy substantially identical stock or securities,
  • Acquire substantially identical stock or securities in a fully taxable trade,
  • Acquire a contract or option to buy substantially identical stock or securities, or
  • Acquire substantially identical stock for your individual retirement arrangement (IRA) or Roth IRA.
If you sell stock and your spouse or a corporation you control buys substantially identical stock, you also have a wash sale.
(emphasis mine)
.
livesoft
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Re: TLH and joint accounts

Post by livesoft »

Right. And it would not matter if you had individual taxable account(s) or if either of you had a joint account not with your spouse. The mere fact that you are married sets the scene.
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Raspberry-503
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Re: TLH and joint accounts

Post by Raspberry-503 »

thanks for confirming.
Ninjadoc
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Re: TLH and joint accounts

Post by Ninjadoc »

Latching on to this question. My taxable account (basically used for retirement savings/investments beyond tax protected accounts) is just under my name. Any strong reasons I should make it a joint account with my wife? Mainly wondering or worried about asset protection issues. Thanks!
livesoft
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Re: TLH and joint accounts

Post by livesoft »

Ninjadoc wrote: Mon May 17, 2021 11:49 am Any strong reasons I should make it a joint account with my wife? Mainly wondering or worried about asset protection issues. Thanks!
I don't know for sure, but check your state law on what gets a step-up basis when you die. In Texas, all our jointly held assets get a step-up basis, but that is not the case in all states.
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anon_investor
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Re: TLH and joint accounts

Post by anon_investor »

Ninjadoc wrote: Mon May 17, 2021 11:49 am Latching on to this question. My taxable account (basically used for retirement savings/investments beyond tax protected accounts) is just under my name. Any strong reasons I should make it a joint account with my wife? Mainly wondering or worried about asset protection issues. Thanks!
Depending the source of the money, if you get divorced, it may be better to have kept the money separate (depending on the state)... just saying...
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FIREchief
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Re: TLH and joint accounts

Post by FIREchief »

livesoft wrote: Mon May 17, 2021 3:29 pm
Ninjadoc wrote: Mon May 17, 2021 11:49 am Any strong reasons I should make it a joint account with my wife? Mainly wondering or worried about asset protection issues. Thanks!
I don't know for sure, but check your state law on what gets a step-up basis when you die. In Texas, all our jointly held assets get a step-up basis, but that is not the case in all states.
I believe that even individual accounts receive a full step up in community property states, especially if they have been declared "community property."
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.
livesoft
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Re: TLH and joint accounts

Post by livesoft »

FIREchief wrote: Mon May 17, 2021 5:00 pm
livesoft wrote: Mon May 17, 2021 3:29 pm
Ninjadoc wrote: Mon May 17, 2021 11:49 am Any strong reasons I should make it a joint account with my wife? Mainly wondering or worried about asset protection issues. Thanks!
I don't know for sure, but check your state law on what gets a step-up basis when you die. In Texas, all our jointly held assets get a step-up basis, but that is not the case in all states.
I believe that even individual accounts receive a full step up in community property states, especially if they have been declared "community property."
I guess my point was that the surviving spouse would not get any step-up on their individual account, but would if those securities had been held in a a joint account with their deceased spouse. So I think you mean individual accounts of the deceased would get a full step up for sure, but did you also mean the individual account of someone who had not died would get a step-up basis? I don't think you meant that.
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FIREchief
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Re: TLH and joint accounts

Post by FIREchief »

livesoft wrote: Mon May 17, 2021 8:24 pm
FIREchief wrote: Mon May 17, 2021 5:00 pm
livesoft wrote: Mon May 17, 2021 3:29 pm
Ninjadoc wrote: Mon May 17, 2021 11:49 am Any strong reasons I should make it a joint account with my wife? Mainly wondering or worried about asset protection issues. Thanks!
I don't know for sure, but check your state law on what gets a step-up basis when you die. In Texas, all our jointly held assets get a step-up basis, but that is not the case in all states.
I believe that even individual accounts receive a full step up in community property states, especially if they have been declared "community property."
I guess my point was that the surviving spouse would not get any step-up on their individual account, but would if those securities had been held in a a joint account with their deceased spouse. So I think you mean individual accounts of the deceased would get a full step up for sure, but did you also mean the individual account of someone who had not died would get a step-up basis? I don't think you meant that.
Yes. That's what I meant. A married couple can sign a declaration that all their property is community property (regardless of title), and the IRS has honored these in the past. A lawyer can also add such a document to an estate plan for no extra cost. I can die and my wife can get a step up basis on her individual account. It doesn't have to make sense. It's the government. :P (see my signature)
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.
livesoft
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Re: TLH and joint accounts

Post by livesoft »

Very interesting. Thx.
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