Calculating Adjusted Holding Period

Related statutes and regulations are currently ambiguous with regard to determining adjusted holding period under the wash sale rules.   The issue is whether short or long term capital gains treatment upon disposal of wash sale adjusted shares is determined (a) by computing actual days held for the original shares plus any and all instances of replacement shares (referred to as the ‘holding period’ approach), or (b) using the acquisition date of the originally disallowed loss as the adjusted acquisition date for any and all instances of replacement shares (referred to as the ‘holding date’ approach).

Silver believes the holding period approach to be highly problematic and open to abuse, while the holding date approach is far simpler, more consistent with the intent of the wash sales rules, and cannot be similarly abused.

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