Discussion:Pub Traded Pship - Disposition & Reacquired
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Msmith7305 (talk|edits) said: | 5 April 2006 |
| Does anyone know the rule for this? Taxpayer buys 100 units of ABC PTP in June 2003. Has suspended losses for 2003 and 2004. In May of 2005 completely disposes of all 100 units. In December of 2005 he buys 200 units of ABC PTP. Does he get to deduct the suspended losses on the units he sold in May? Does it make a difference if he had waited until January of 2006 to buy the 200 units?
I can't seem to find a definitive answer on this. Thanks | |
| 5 April 2006 | |
| Its not a wash sale, so I would vote for allowance on disposition. | |
Msmith7305 (talk|edits) said: | 5 April 2006 |
| I'm not worried about a wash sale issue. Overall, there is a gain. The gain, however, is LTCG at 15% with the suspended losses being ordinary. I'm concerned about the rule for "complete disposition". Think of the possibilities.....
You have a PTP with large suspended losses you would like to claim. You do, however, like the PTP and want to keep it. Sell all of the units you have and then simply buy more a little later. Sounds like a great way to avoid the suspended losses. Somehow this doesn't seem to be what Congress had in mind. | |
| 5 April 2006 | |
| You have a stock with with a large unrecognized loss. You like the company. You sell the stock to take the loss and then buy it back after 30 days. Did Congress have that in mind? | |
Msmith7305 (talk|edits) said: | 5 April 2006 |
| Dennis-
The only problem is, we're not discussing stock. We're talking PTPs which are subject to the passive activity provisions. And those provisions refer to a "complete disposition". | |
| 5 April 2006 | |
| I would agree with Dennis. While this is not stock, the theory behind the wash sale rules stand and show Congress' intent. A six month wait between disposition and reacquisition should certainly qualify as a 'complete' disposition regarding the suspended losses. Six months is certainly enough time for substantial business activity to occur and your client would not have any interest in this business activity. The fact that it occurred in the same tax year should not apply. A wash sale can certainly occur through the boundaries of two consecutive tax years. Perhaps more importantly....is there a business/investment purpose behind the disposition/reacquisition of the PTP, other than claiming the suspended losses? | |
Msmith7305 (talk|edits) said: | 6 April 2006 |
| Captcook-
I don't understand why anyone is bringing up the wash sale rules. They only apply in a 30 day before and a 30 day after window to begin with. Secondly, they only apply when there is a LOSS on disposal. I stated in my first post we are talking about May sale and December reacquisition. Far outside of the wash sale period. In my second post I pointed out that he has an overall GAIN. Again, outside of a wash sale condition. My concern is with the language in the 8582 instructions about a "complete disposition in a taxable year". Unfortunately, the reg that looks like it might apply is simply "reserved" and has not been written. | |
| 6 April 2006 | |
| What we are trying to tell you is that we think your client has a complete disposition. The reference to the wash sale rule is part of the reasoning that led to my conclusion. I am not saying you have or do not have a wash sale. I am saying that the reason the wash sale rule exists has an application to your situation. | |
