I got into investing last year and there is a repeated trade on a stock I made that is bothering me. I'm not sure I fully understand the wash sales rule. Most of the examples online discuss selling a stock for a loss and re-buying the same stock and then selling it for a profit, which means you have a gain, but can't use the losses. I've since moved into an actual brokerage account and learned about panic trading vs investing in quality names, but this scenario is still bugging me. I did this a few times last year and hadn't thought much about it because I thought I was taking a loss each time.
Kind of panicking about what is going to show up on my taxes this year and looking for help. This was all within 30 days:
-Bought 40 shares at stock XYZ at $280/share.
-Sold 15 shares of XYZ @ $250/share.
-Repurchased 15 shares at $260/share.
-Sold 40 shares at $240/share
and did not purchase xyz again for 84+ days
Once I repurchased the 15 shares did I trigger a wash sales which I add my initial loss to for the adjusted cost basis. I'm confused about how to handle the partial shares I had left, and when I sold the entire 40 shares am I generating a gain?
this was my basic understanding of wash sales:
For example, let’s say you have 100 shares of XYZ stock that you bought for $10 a share, or $1,000 total. You sell the stock for $8 a share and then 23 days later re-buy 100 shares for $7 a share. Because you’ve repurchased the stock within the 30-day window, you have a wash sale.
So you won’t be able to claim a loss on the first lot of 100 shares, and you’ll have to add the disallowed loss onto the cost basis of your new 100 shares. In this case, your initial loss of $200 is added to your new purchase of $700 ($7 * 100 shares), meaning your new cost basis is $900. Your capital gains taxes will be figured using this adjusted cost basis.
So if I sell here at $8 I do not generate a gain, so I'm not worried about having to pay taxes. is that correct? But if I sold the stock at $12 I'd have a gain I owe taxes on $300? and if I had originally waited longer than 30 days I could have written off the $200 loss.
Sorry for the long post, any insight would be great!!