0

Using the following as an example, for any equity (stock):

1/15 BUY  10 @ $100
6/15 BUY   5 @  $50
6/20 SELL 10 @  $30
6/22 BUY  99 @  $20

Are 5 shares a wash sale, or 10 shares, 15 shares, or 99 shares?

Then, on 7/23 or later, can one sell up to 99 shares and claim the full loss incurred from the 6/20 sale?

NerdWallet writes:

"If the wash sale rule did not exist, you could hypothetically sell assets any time they lost money and repurchase them the same day to capture capital losses without ever losing exposure to that investment."

Yes, but even with the wash sale rule, could you then repurchase later the same day, with the only downside being that you have to hold the new purchase for 30 days before you sell again?

2 Answers 2

1

could you then repurchase later the same day, with the only downside being that you have to hold the new purchase for 30 days before you sell again?

No, the 30 days is from the sale at a loss. When you sell at a loss, you'll need to identify whether you have a buy transaction within 30 days before or after that sale, and adjust the basis of that purchase with the disallowed loss.

You can sell it any time you want, but as long as you sell at a loss and have another buy transaction within these 30 days back and forward looking windows - you'll continue having this loss disallowed and added to the basis of the repurchased shares.

In your example, you sold 10 shares for $30. Assuming this is the lot you bought on 1/15 - you have $70 loss, $7 per share. You then bought 104 shares within 30 days before and 30 days after that sale. You need to adjust the basis of 10 of those shares by these $7, each.

So the lots you have would be:

Lot 1: 10 @100 sold @30, disallowed loss $70, $7 per share.
Lot 2: 5  @$57 ($50 + $7 disallowed for 5 shares)
Lot 3: 5  @$27 ($20 + $7 disallowed for 5 remaining shares)
Lot 4: 94 @$20 ($20 for the 94 of the 99 shares, other 5 were adjusted)
2
  • The first sale at $30 would have been 10 x $70 loss.
    – gnasher729
    Commented May 31, 2023 at 6:26
  • @gnasher729 I assumed $100 and $30 were for the entire lot, but either way works
    – littleadv
    Commented May 31, 2023 at 16:07
0

The logical principle is that a wash sale is treated as if it had been done by someone else, and the same number of shares are bought and sold.

So instead of buy 10, buy 5, sell 10, buy 99 it is treated as if I had bought 5, sold 10, bought 5 of the 99 (that’s the wash sale) and you bought 10 then 94. I lost $50 and can use that loss, you own 10 shares at $100 and 94 shares at $20 and these numbers are used for your future taxes.

And then we combine the numbers back into your name.

Your big loss on the $100 shares is only tax deductible once you sold your 94 shares at $20 plus ten more.

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .