Don't Get Crafty With the Wash-Sale Rule

Beverly,

I've seen conflicting views on how the wash sale rule applies when IRAs are involved. If I remember correctly, an IRA has special ownership status, like a trust, so it could be argued that it does not. On the other hand, the beneficiary of the IRA has beneficial ownership of the shares so it could be argued that it does.

If someone sells 100 ZYX in brokerage account A for a loss and then 25 days later buys 100 ZYX in IRA account B, does the wash sale rule apply? If the wash sale rule does apply, then the basis of the shares in the IRA would be adjusted upwards. Since gains and losses in an IRA are meaningless tax-wise the loss is in effect being denied and not delayed.

It would seem unfair that the wash sale rule would apply when an IRA is involved, but since many parts of the tax code are unfair it wouldn't surprise me if it does. ...