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Let's say I had 10 shares of XYZ.

  1. On Dec 1 I sold 10 shares for XYZ for a loss ($1 per share, total $10).
  2. On Dec 2 I bought 20 shares of XYZ (single lot). So previous sale (On Dec 1) was a wash sale. Loss is disallowed and 10 out of 20 of newly purchased shares are considered replacement shares.
  3. On Dec 3 I sold 10 shares of XYZ (Transaction A).
  4. On Jan 1 of next year I sold 10 shared of XYZ (Transaction B).

Cost basis of which 10 shares (transaction A or B) should be adjusted by the disallowed loss?

According to Pub 550:

More or less stock bought than sold. If the number of shares of substantially identical stock or securities you buy within 30 days before or after the sale is either more or less than the number of shares you sold, you must determine the particular shares to which the wash sale rules apply. You do this by matching the shares bought with an equal number of the shares sold. Match the shares bought in the same order that you bought them, beginning with the first shares bought. The shares or securities so matched are subject to the wash sale rules.

So if I instead purchased 20 shares in two different transactions (10 shares each) then I'd need to adjust cost basis of the first lot. But Pub 550 doesn't seem to explain what to do when more replacement shares were purchased as a one lot.

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  • how did the price of the shares sold on December 3rd compare to the other transactions? Feb 19 at 14:07
  • I'm not sure how would it affect answer but let's say: On Dec 2 I bought 20 shares of XYZ for $10 each, $200 total. On Dec 3 I sold 10 shares of XYZ for $12 each, $120 total (Transaction A). On Jan 1 of next year I sold 10 shared of XYZ for $13 each, $130 total (Transaction B).
    – Andrey
    Feb 20 at 3:20

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