If I sold a stock for a gain then bought back 3 days later at a lower price but sell now due to the stock tanking do I pay capital gains on the original sale?
Title: If I sold a stock for a gain then bought back 3 days later at a lower price but sell now due to the stock tanking do I pay capital gains on the original sale? 1 I recently sold some shares of an investment I had for a total gain of about $98k, but I ended up buying back in a few days later when the price dropped about 10%. The problem is since buying back in, the stock has absolutely tanked - down like 40% and I'm currently sitting on a paper loss of roughly $51k. I'm really torn on whether to sell now or wait for a potential recovery. My big concern is taxes. I'm worried I'll have to pay capital gains on that initial $98k sale even though my actual gain is only around $32k now after buying back and watching it drop. If I sell now, do I still have to pay capital gains tax on the full $98k from my original sale? Or would I only need to pay taxes on the $32k that represents my actual gain after these transactions? Really kicking myself for selling in the first place, but trying to figure out the best move tax-wise going forward.
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Mateo Silva
8 Yes, you do have to pay capital gains on the original $98k sale. Each transaction is treated separately for tax purposes. Your first sale triggered a taxable event with a $98k gain. That's locked in already. When you bought back in, you established a new cost basis for those shares. If you sell again now at a loss, you'd be looking at a $51k capital loss on the second transaction. You can use capital losses to offset capital gains plus up to $3,000 of ordinary income per year. So if you sell now, on your taxes you'd report both the $98k gain and the $51k loss. Your net would be a $47k taxable gain. Any unused losses can be carried forward to future tax years.
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Mateo Silva
•3 Doesn't the wash sale rule apply here since they bought back within 30 days? Would that change how the loss is calculated?
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Mateo Silva
•8 The wash sale rule only applies when you sell at a loss and then buy back within 30 days. It doesn't apply when you sell at a gain and then buy back. Since the original poster sold at a gain, the wash sale rule doesn't come into play for that first transaction. If they sell now at a loss, that would be a legitimate capital loss they can claim, since they'd be selling at a loss and not rebuying within 30 days (assuming they don't rebuy again right after).
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Mateo Silva
15 After dealing with a very similar situation last year, I found this amazing tool at https://taxr.ai that helped me understand all my capital gains calculations. I had sold Tesla at a profit then rebought lower, only to watch it drop further. I was completely confused about my tax situation. The tool analyzed all my trading history and broke down exactly which transactions were taxable events, calculated my total capital gains exposure, and even showed me tax-loss harvesting opportunities. It saved me hours of spreadsheet work and probably thousands in taxes by helping me make smarter sell decisions before year-end.
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Mateo Silva
•9 How does it handle more complex situations? I've got some RSUs and employee stock purchases mixed in with regular trades and it's a complete mess.
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Mateo Silva
•19 I'm curious - does it connect directly to your brokerage account or do you have to manually enter all your trades?
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Mateo Silva
•15 It handles complex situations really well with different asset classes, including RSUs and employee stock purchases. The platform has specific modules for equity compensation that track the different tax treatments. You just need to make sure you input the grant dates and vesting schedules correctly. For connecting to accounts, you can either connect directly to major brokerages for automatic import or upload transaction history as CSV files. If you have multiple accounts, it consolidates everything into one tax picture, which was super helpful for me since I had trades spread across three different platforms.
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Mateo Silva
19 Just wanted to follow up on my question about taxr.ai - I ended up trying it and wow, it's even better than described. I had a complicated mess of trades across Fidelity, Robinhood and Coinbase, and I was able to import everything in about 10 minutes. The visualization of my tax lots and potential tax bills was eye-opening. I had no idea I was sitting on so much unrealized loss that could offset gains. Based on the recommendations, I did some strategic selling before the end of the year and saved almost $4,300 in taxes! The specific guidance around short vs long term gains made all the difference. Definitely keeping this in my toolkit going forward.
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Mateo Silva
6 I went through an absolute nightmare trying to get answers from the IRS about a similar capital gains situation last year. Called for weeks and couldn't get through. Finally found https://claimyr.com and watched their demo at https://youtu.be/_kiP6q8DX5c - they got me connected to an actual IRS agent in 45 minutes when I'd been trying for days. The agent confirmed everything that was mentioned above about how the transactions are treated separately. They also explained some nuances about how to properly document everything on my Schedule D that I never would have figured out on my own. Totally worth it to get the official word directly from the IRS.
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Mateo Silva
•11 Wait, how does this actually work? The IRS phone system is completely broken, how could they possibly get you through when the IRS itself says wait times are hours long?
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Mateo Silva
•22 Sounds like bs honestly. No way anyone is getting through to the IRS that fast. I tried calling for 3 months straight about my refund.
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Mateo Silva
•6 It works because their system navigates the IRS phone tree and waits on hold for you. When they finally reach a human agent, you get a call connecting you directly. No more listening to that terrible hold music for hours! They essentially have a system that handles the waiting part, and they know the optimal times to call and which options to select to minimize wait times. It's legitimate - they don't have special access to the IRS, they just have a way to automate the waiting process. Think of it like having someone else wait in line for you, and they text you when they get to the front.
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Mateo Silva
22 I need to eat my words here. After my skeptical comment, I actually tried Claimyr out of desperation (was dealing with a notice about unreported stock sales and facing penalties). Got connected to an IRS rep in about 35 minutes. The agent clarified that I hadn't properly reported basis information on several trades, which is why I got flagged. She walked me through exactly how to respond to the notice and what documentation to include. Saved me at least $1,800 in potential penalties. Not only did I get through quickly, but the IRS person I spoke with was actually super helpful once I explained my situation. Definitely a different experience than I expected based on all the horror stories.
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Mateo Silva
7 Something that hasn't been mentioned yet - if you're planning to sell at a loss, be aware of the timing for tax purposes. If you sell before the end of the year, you can use those losses on this year's tax return. But if your loss is larger than your gains plus $3k, you might want to spread out the sales across tax years to maximize the benefit.
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Mateo Silva
•14 If they already have a $98k gain this year, wouldn't it make sense to take the full loss now rather than spreading it out? They're not going to exceed their gains with the $51k loss.
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Mateo Silva
•7 You're absolutely right in this specific case. Since they have a $98k gain already realized, taking the full $51k loss this year makes perfect sense as it directly offsets part of that gain. My advice about spreading losses across tax years applies more to situations where someone has losses exceeding their gains plus the $3,000 ordinary income offset. In the OP's case, they should definitely take the full loss now if they decide to sell.
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Mateo Silva
2 Just to clarify something - are you using a tax-advantaged account like an IRA or is this in a regular taxable brokerage account? If it's in an IRA or 401k, none of this capital gains stuff applies since those accounts are tax-deferred or tax-free.
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Mateo Silva
•10 Pretty sure they're talking about a taxable account since they're worried about capital gains tax. You don't pay capital gains taxes on trades within retirement accounts.
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Logan Scott
This is a tough situation, but the advice you've gotten is correct - each transaction is treated separately for tax purposes. Your original $98k gain is already a taxable event that's locked in. One thing to consider is your overall tax strategy for the year. If you sell now and take the $51k loss, your net taxable gain would be $47k ($98k gain minus $51k loss). But you might want to look at whether you have any other investments with unrealized losses that you could harvest to further offset that gain. Also worth noting - if this stock continues to decline and you think it might recover eventually, you could consider selling now to capture the tax loss, then wait 31 days before buying back to avoid the wash sale rule. That way you get the tax benefit while still being able to re-enter the position if you believe in the long-term prospects. The timing of when you sell matters too since we're getting close to year-end. Make sure any sale settles before December 31st if you want the loss to count for this tax year.
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Zadie Patel
•This is really helpful advice, especially the point about tax-loss harvesting other positions. I hadn't thought about looking at my entire portfolio to see what other losses I could capture to offset more of that $98k gain. The 31-day wait period strategy is interesting too - basically take the tax loss now but still be able to get back in if I believe the stock will recover. That seems like it could be the best of both worlds, assuming I'm willing to risk missing out on any potential recovery during that month. Question about the settlement timing - if I place a sell order on December 30th, does that count for this tax year even if it settles in January? Or does it have to actually settle by December 31st?
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