TLDR version:
If I buy additional shares of a stock to be sold at a loss when an in the money covered call I sold is exercised, can I use that loss to offset gains provided I don’t buy anymore within 30 days?

Long version:
Bought stock last fall at $16, started selling covered calls against my shares for income. Stock started running up, rolled my contracts up and out several times trying to get ahead of it.  Stock going up faster than I can raise the strike price without coming out of pocket.

Currently $26.xx share price with May $25 CC sold against them. Don’t want to pay short term capital gains if I let the contract be exercised and rolling the contracts is becoming less viable due to premiums going wild. Would like to keep my (low cost basis) shares.

Plan is to buy an equal amount of shares now, set my preferences to LIFO or highest basis to ensure new shares are the ones sold when the contract exercises.  The $1.xx per share loss would be better than buying back the contracts at $3+ per share.  Should the stock drop and the contracts expire worthless I’m fine with owning 2x the shares.

My question here is; would the technical loss created by this transaction be able to be used to offset gains if I didn’t trade in the stock for the allotted time after the option(s) were exercised?  I have stumped two CPAs with this one but I suspect neither had much experience with derivatives.

I am not a CPA, but I think you can.  Then, I thought a bit more.  It probably falls afoul of the wash sale rules, if you purchased the second block of shares within 30 days of exercise.  So I have changed my mind again.  Not sure how they would catch it without an audit, though.

So, I don't think you can.  But if I am wrong, I will refund what you paid for this advice.

I like your plan, just enough fog to create a credible amount of confusion.  Make em catch you...  As the poster above mentioned, probably some wash sale rules will come into play, but, you never know.  I'd say roll the dice.

Just got off the phone with a distant relative who is a financial advisor, stumped him too.  Think I’m going to proceed with the transaction because even if I can’t utilize the loss that’s created I’ll still be better off holding onto my lower basis shares until they hit long term status.

@grendelbane

Hadn’t thought about the shares being bought 30 days before exercise. Found this on Investopedia:
Attached File

Currently just over two months from expiration.

Sounds like your plan will work then.  Unless you are exercised early.  I would buy tomorrow.  Your call probably won't be exercised a month early, (though anything is possible).

That should pass muster for the wash sale aspect. And yeah, Reddit's WSB forum does all kinds of things far more crazy than this. If you ask there, you'll probably get the answer, if you filter through all the crap as well.

What's the underlying on the option?

Option is PLTR May 17th $25 call (closed at $3.70 today)
Average cost basis on shares is $16.25 with purchase dates in Oct & Nov 23.
“Replacement” shares purchased today @ $26.25
Modified other positions in the stock so I can remain hands off from now until late June to avoid wash sale.