>>ssalka+(OP)
The way realized gains work is that if you sell at a loss, you don't get a tax deduction, but you can claim a loss against future gains in the next three years (if you ever have any). I'd imagine it would work the same: if you had $1000 worth of stock in January that went down to $750 in December, you'd have a $250 carry-forward "credit" for the next year, so if the stock went up to $1250 you could sell it with no tax implication. That's more or less how it works now, it just makes for some complicated tax forms, but aren't really a problem for the courts.