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I buy 100 shares of ABC @ $50. I sell it in a week for $45. I buy it back in a week at $30. My understanding is that the adjusted basis for the last purchase was $35. Is that correct? If so, it seems the wash sale made sense, given the stock was trending lower significantly. Any help here appreciated.

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The wash sale means that you can't deduct the realized $5 loss until your sell the replacement shares. So as noted, you adjust the cost basis of the replacement shares and indirectly claim the loss when they are sold.

Creating a wash sale makes sense if you think that owning the stock at $30 is a good idea.

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