Wash Sales
The purpose of the "wash-sale" rule is to prohibit the taking of a tax loss deduction on a security position that is sold for a loss, if the identical position is repurchased again by the account owner within a reasonable short amount of time.

Wash-Sale Rule:
"A loss deduction is barred if within 30 days of a sale you buy substantially identical stock or securities or a 'put' or 'call' option on those securities."

The wash-sale period actually runs for 61 days total. This starts the 30 days before the sale to the 30 days after the date of sale. The wash-sale rule does not apply to gains, inheritance, tax-free exchanges or acquisitions by gift. The wash-sale rule does apply to spouses as well: whereas, a loss can be disallowed if you realize a loss in a security, and your spouse buys a substantially identical position within the period.

Bargain Sales
Bargain sales occur when a seller gifts or accepts an installment sale on a piece of property to a charitable organization for an amount less than the current fair market value (FMV). Typically, donors will accept less than FMV for a charitable contribution in order to receive a tax deduction.

Current tax law will allow you the full charitable deduction, but you must adjust cost basis which may trigger capital gains. Example:
Bruce owns a Civil War sword that was recently appraised at \$40,000 that he would like to see in a museum on display. He paid \$20,000 for the sword 10 years ago, and works out an agreement with a museum where they give him his original cost of \$20,000 back for the sword.

FMV = \$40,000

Adjusted Basis (B) = \$20,000

Sale Price (SP) = \$20,000

Bruce will get a \$20,000 charitable tax deduction; however he will also have a \$10,000 capital gain.

Basis allocated to sale = SP x [B/FMV]
= \$20,000 x [\$20,000/\$40,000]
= \$10,000

Realized gain = Amount realized (SP) less basis allocated to sale
= \$20,000 - \$10,000
= \$10,000 capital gain

Section 1244 Stock and Installment Sales

Related Articles
1. Taxes

How Taxpayers Can Do A Legal Wash Sale

The wash sale rule can result in the disallowance of a much-needed deduction. Here you can learn what constitutes a wash sale and how to avoid it.

How to Avoid Violating Wash Sale Rules When Realizing Tax Losses

How to avoid violating the IRS wash sale rules when realizing capital losses in your taxable investment account.
3. Investing

7 Year-End Tax Planning Strategies

Do you have a capital loss that could be booked and used to offset future tax liabilities? If so, it may be time to sell.
4. Taxes

There's Still Time for Tax Planning in 2016

Hereâ€™s a look at some considerations for year-end planning for taxable (non-retirement) accounts.
5. Taxes

Capital Losses and Tax

Capital losses are never fun to incur, but they can reduce your taxable income. Knowing the rules for capital losses can help you maximize your deductions and make better choices about when to ...
6. Taxes

Here's How to Deduct Your Stock Losses From Your Tax Bill

Learn the proper procedure for deducting stock investing losses, and get some tips on how to strategically take losses to lower your income tax bill.

Top Tips for Deducting Stock Losses

Investors who know the rules can turn their losing picks into tax savings. Here's how to deduct your stock losses.
8. Taxes

7 Ways To Minimize Your 2014 Taxes By December 31

The year's not quite over yet. See whether taking any of these steps would leave you owing less in 2014 taxes, come April.

Top Tips for Maximizing Charitable Deductions

Charitable donations can be a great financial planning tool. Here are some ways to make the most of them.
10. Taxes

5 Tax Moves To Make Before Year End

Taxes aren't avoidable, but you shouldn't pay more than your fair share. Here are five moves you can make at year's end to lower your tax bill.