Can I avoid the 30-day wash-sale rule by trading in two online accounts?
By Judy Feldman

(MONEY Magazine) – Q. The wash-sale rule says I can't write off a loss on a security if I buy the same stock within 30 days of the sale. I have two separate brokerage accounts. Can I take a loss if I sell 200 shares in my E-Trade account and then purchase 200 shares of the same company the next day in my Ameritrade account? Or can I take the loss if I sell the 200 shares from one of my accounts and then my wife buys the same stock in her account? RONALD HESS SAN ANTONIO

A. We admire your tenacity, but the wash-sale rule is directed at the taxpayer (or taxpayers if you file jointly), not the accounts used to trade the stocks--so neither strategy will work.

However, if you're not concerned about taking the loss this year, consider this alternative: If the stock becomes hot after you sell it and you don't want to wait out the 30 days, buy it and use the loss to offset future gains when you sell the new shares. Just add the amount of the disallowed loss to the cost basis of the new shares. By increasing the basis, you'll generate a smaller gain (or a larger loss) when you eventually sell those shares.

You can also add the holding period of the old stock to the holding period of the new stock, which may reduce the taxes on your gain if you sell the new investment before a year elapses. But be sure to save all your documents to prove when you bought and sold shares.

Q. My father will turn 70 1/2 years old this year, and thanks to the bull market he has built up an impressive IRA nest egg. Although he doesn't need the money, I realize that IRA minimum-distribution rules require that he start making withdrawals. What method of distribution should he use? STEVE WHITE BOSTON

A. Your dad's in luck. The Internal Revenue Service recently simplified the rules governing the mandatory distributions for tax-deferred retirement accounts such as IRAs, 401(k)s and 403(b)s. Effective immediately, most account holders who turn 701/2 must use the uniform life expectancy table to calculate how much they are required to withdraw.

By reducing the amount that most people will be required to take out of the account, this change means many investors will be allowed to leave larger chunks of their nest eggs intact to continue growing tax deferred. (Even if you're currently withdrawing money, you may be eligible to adjust your schedule.) The new rules also make it easier to change beneficiaries.

For more information about the new rules (including who qualifies and who does not) and to access the uniform withdrawal table, go to or

Q. My sister recently retitled 6,000 shares of stock, making each of my three daughters a co-owner (with her) of 2,000 shares. Technically, the girls are considered joint tenants with rights of survivorship. Will there be a tax consequence when my sister dies? NAME AND LOCATION WITHHELD

A. Since your sister has not relinquished control of the stock while she is alive, she doesn't have to worry about paying gift taxes, even if the value of any girl's stake is more than $10,000. And unless your sister's estate exceeds the exemption amount in effect at the time of her death, the transfer of ownership will not trigger federal estate taxes. (The exemption is set to rise from $675,000 this year to $1 million in 2006.)

Finally, because your daughters did not pay for the stock they will inherit, the cost basis of the shares will be stepped up to the fair market value at the time of your sister's death. This may reduce their tax bite when they sell their shares.