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Cherokee Inc. (CHKE) Message Board

  • fuzzhead72 fuzzhead72 Oct 8, 2008 10:33 PM Flag

    Down almost $10 - tax question

    I unfortunately made the decision to invest roughly 1/3 of my $ in this stock when it looked like it was starting to go back up, and I got in when it was just about $26.

    Now it has dropped about $10 in just 3 or 4 weeks. Ouch!

    Earlier this year, I made a decent profit on MVL after holding it for about a year and a half. I'm wondering if I should sell CHKE now for a tax loss, then pick up the shares cheap again in a week or so?

    That would let me not pay the taxes on MVL now, but perhaps end up paying more taxes later on CHKE. Not sure if it is worth it. Of course, the taxes on MVL are definite, and the taxes on CHKE are possible, but not definite. (not to mention possibly deferred over quite some time)

    Can anyone shed some light on this for me? I'm not sure which way to go on it. Thanks!

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    • You have to wait 31 days to buy back any stock you:
      1. sell at a loss
      2. take the tax break on the loss

      Otherwise, traders would be buying and selling daily claiming all kinds of tax losses. The 31-day rule is designed to prevent someone from playing the system.

      Can you sell and then buy back in less than 31 days? Yes, but you can't get the tax credit for the loss.

      • 1 Reply to jaygore04
      • If you sell the stock at $15 and bought it at $25 you'd have a ten dollar loss. However, you can only take the loss if your purchases were 31 days away from the sale. So let's say tomorrow you sold the sold 1000 shares of cherokee then ten days later you bought 1000 shares that would be a wash sale. If you sold the shares for the same $15 dollars you payed as far as the IRS is concerned the sale never happened. However, if you payed $20 ten days latter for the shares then you would have $5 added to your basis (in your example your basis would move from $26 to $31). But you get no tax benefit for this year. You also should consider that if your gains are long term capital gains you'll be paying very low taxes on them anyway, especially if your in a low tax bracket (I think it's 5% for the first two brackets this year, although they might be completely fazed out also you'll have to google it). SO I guess it depends on your situation, but if you sell some of your chke you must wait 31 days before buying it again if you want to use the loss to offset your gains. Also if you buy more chke today you must wait 31 days before you make a sale or else you'll trigger the wash sale rule as well. Hope this helps

    • Call margolis riopelle siegel to fill some form 4s and and put their b**T on the line. I haven't seen such passive management in my investing history. Maybe we should invite someone like carl icahn to be on their board.

      Their board members are paid too fat a retainer for basically nothing. Just personal relationship with margolis.

      • 1 Reply to getgoing_star
      • What do you expect the board to do - They can only buy a certain amount of stock (I am not sure of the formula, but it has to do with timing and with average volume).

        Whoever wrote that the hedge funds have redemptions are right - thats whats keeping good companies down - at $15 per share - they now have a 13% dividend that is basically guaranteed because of cash position of the company

    • You're about a week too late. The market and CHKE along with it aren't going to drop significantly in the immediate term.

      I'd hold the stock and collect the dividends if you like company. Otherwise, wait for the coming rally and then sell out.

      I'm long at about 26 as well and I'm just going to hold... Chke pays a fat dividend and will perform well when things start turning around.

 
CHKE
28.39+0.09(+0.32%)Jul 2 4:00 PMEDT