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I have already looked at this question and its answers, but I have a slightly different question.

Suppose I buy 100 shares of a stock on July 1, and two weeks later, on July 15, sell 50 of those 100 shares at a price lower than I paid for them.

Could the IRS argue that the 50 shares I did not sell constitutes a purchase within 30 days of the sale, and therefore consider my loss a wash sale and prevent me from deducting it?

As a slight variation, does it matter whether I made one order or two on the same day to purchase the original 100 shares?

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    (to the member voting to close) The question is clear. What clarification do you want? It may be a duplicate, but that's a different issue.
    – JTP - Apologise to Monica ♦
    Commented Apr 2, 2023 at 14:14
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    It is not a wash sale (see my comments below).
    – Bob Baerker
    Commented Apr 2, 2023 at 19:45
  • @0xFEE1DEAD - kinda curious why you deleted your correct answer.
    – Bob Baerker
    Commented Apr 3, 2023 at 0:43
  • I would recommend unaccepting the currently-accepted answer until a more authoritative source is provided. It's pretty clear that this is not what the rule was intended to mean and none of the examples provided in the CFR (or anywhere else that I can see) anticipate such a use of the rule.
    – reirab
    Commented Apr 3, 2023 at 7:26
  • @reirab Again, you can dislike the law as much as you want, but what I cited is the actual law. So unless you can show a court precedent interpreting it in the way you want - your personal opinions on the matter don't really make any difference during the IRS audit.
    – littleadv
    Commented Apr 3, 2023 at 17:26

3 Answers 3

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Could the IRS argue that the 50 shares I did not sell constitutes a purchase within 30 days of the sale, and therefore consider my loss a wash sale and prevent me from deducting it?

Yes. See the Publication 550:

A wash sale occurs when you sell or trade stock or securities at a loss and within 30 days before or after the sale you:

Buy substantially identical stock or securities, ...

So you bought the 100 shares on July 1st and sold 50 of them on July 15th - you end up with a wash sale and the basis of the remaining 50 will be adjusted for the loss.

The difference from the original question you linked to was that there were no shares remaining in that scenario. There, the OP sold all the shares, and didn't repurchase. This is not the same in your scenario.

There's some confusion in the comments about the concept of "replacement shares". Note that this concept is not mentioned in the text I quoted from the Publication. It's a term used loosely to explain what a wash sale is, but the "replacement" doesn't actually need to be actual physical replacement. If you want to go into more details - feel free to read through 26 CFR 1.1091-1:

(a) A taxpayer cannot deduct any loss claimed to have been sustained from the sale or other disposition of stock or securities if, within a period beginning 30 days before the date of such sale or disposition and ending 30 days after such date (referred to in this section as the 61-day period), he has acquired (by purchase or by an exchange upon which the entire amount of gain or loss was recognized by law), or has entered into a contract or option so to acquire, substantially identical stock or securities.

There's no mentioning of "replacement" or exclusion of the initial purchase in this text.

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  • Your answer is incorrect. A wash sale is when an investor sells a stock or security at a loss and repurchases the same or a substantially identical security within 30 days before or after realizing that loss. The OP did not acquire substantially identical shares. The original purchase cannot be considered to be "replacement shares".
    – Bob Baerker
    Commented Apr 2, 2023 at 19:43
  • @BobBaerker Nothing is said about "replacement" -- any purchase within 30 days counts.
    – Barmar
    Commented Apr 2, 2023 at 19:50
  • So if I buy 1000 shares for $10 each, sell 999 of them the next day for $9, I end up with a basis of $1009 in the sole remaining share?
    – Ganesh Sittampalam ♦
    Commented Apr 2, 2023 at 20:48
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    Then you'll have $31 basis: $10 original, and 6 times loss on one share for each of the sales, compounded. Isn't wash sale rules fun for kids? Awesome exercise in arithmetic.
    – littleadv
    Commented Apr 2, 2023 at 21:37
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    According to this theory where the initial purchase counts for purposes of the wash sale rule - ignoring the obvious fact that this isn't what the wash sale rule was intended to do - the shares that would be matched whose basis should be increased by the loss are... exactly the same shares that were sold. Thus, even if this did apply, the net effect would seem to be nothing. I'm not a tax professional, but I'm guessing a real tax professional or tax lawyer would laugh at the idea that the wash sale rule could apply to the original purchase, poor wording of the CFR notwithstanding.
    – reirab
    Commented Apr 3, 2023 at 7:17
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No. To be a wash sale you have to sell a stock and buy it back within 30 days. The fact that you only sold some of your shares doesn't make the shares you didn't sell "count as a buy". Not selling is not the same thing as buying, and the IRS doesn't pretend that it is.

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    A wash sale is a sale at a loss with buying replacement shares within 30 days before or after the sale.
    – littleadv
    Commented Apr 2, 2023 at 6:23
  • Here's the confusion, OP asks "Could the IRS argue that the 50 shares I did not sell constitutes a purchase..." The answer to that question is no, but OP also asks: "Do wash sale rules apply for partial sales within 30 days?" Yes.
    – Hart CO
    Commented Apr 2, 2023 at 15:49
  • @HartCO Yes. As I understand the question, OP presented these two ideas as opposites, so yes to one is no to the other. That's what I tried to say in my answer above. If it wasn't clear, sorry.
    – Jay
    Commented Apr 2, 2023 at 18:10
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    It's not two questions. The question is the part after "and therefore"; the first part is just their mistaken premise.
    – Barmar
    Commented Apr 2, 2023 at 19:33
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    @BobBaerker I added CFR to my references on top of the IRS Publication. Do you want to may be reconsider your conviction?
    – littleadv
    Commented Apr 2, 2023 at 21:00
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IRS doesn't care about how the shares are grouped into lots in each sale, each share is considered individually.

So for this purpose, you had 100 purchases on July 1. You sold 50 of them at a loss on July 15. Each of those 50 sales is a wash sale, because it's within 30 days of a purchase.

You can ignore the 50 shares you didn't sell for now. Of course they're treated as a purchase, since you purchased them. But since you haven't sold them yet, you don't mention them on your tax return.

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  • Your answer is incorrect. A wash sale is when an investor sells a stock or security at a loss and repurchases the same or a substantially identical security within 30 days before or after realizing that loss. The OP did not acquire substantially identical shares. The original purchase cannot be considered replacement shares.
    – Bob Baerker
    Commented Apr 2, 2023 at 19:43
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    It's 30 days before or after. So the original purchase is considered a "repurchase".
    – Barmar
    Commented Apr 2, 2023 at 19:47
  • LOL. An initial purchase can be a repurchase as well.
    – Bob Baerker
    Commented Apr 3, 2023 at 0:24

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