If on 01/3/2015 I purchase 100 shares of XYZ for $50 ea. Then, on 01/6/2015 I purchase another 100 shares of XYZ for $30 each. Then, on 01/17/2015 I sell my entire position, 200 shares of XYZ for $35 each. I'm not sure if this is a wash sale because even though I bought on two separate occasion's, I liquidated the entire position at one time. I don't believe I purchased "replacement shares" because I didn't sell any XYZ in between the two purchase dates. However, technically I did incur a loss on the first 100 shares and made a profit on the second 100 shares. Please help.
Yes. A wash sale is when you acquire a security "substantially identical to" one you sell for a loss, 30 days before or after the sale. You sold 100 shares of XYZ on 1/17/2015 for a $15/share loss, and had purchased "substantially identical" (in this case completely identical) shares within the 30 days before the sale, i.e. the 100 shares purchased on 01/06/2015. So 100 of the shares sold create a wash sale.
That being said, it doesn't matter (unless you had other trades of XYZ you didn't mention). The only thing a wash sale does is disallow the loss and make you add the difference to the basis of the purchased shares. So the $15/share loss of the 01/03/2015 shares is disallowed, but it's added to the 01/06/2015 shares making their basis $45/share. The math is:
Ignoring the wash sale rule:
01/03/2015 shares Buy 100 @ $50 = $5,000, sell 100 @ $35 = $3,500, net loss = $1,500 01/06/2015 shares Buy 100 @ $30 = $3,000, sell 100 @ $35 = $3,500, net gain = $500 Total net loss = $1,000
Taking into account the wash sale rule:
01/03/2015 shares Buy 100 @ $50 = $5,000, sell 100 @ $35 = $3,500, net loss = $1,500 But the loss is disallowed and $1,500 is added to total basis of the 01/06/2015 shares, $0 net gain 01/06/2015 shares Buy 100 @ $30 = $3,000 + $1,500 from wash sale = $4,500, sell 100 @ $35 = $3,500, net loss = $1,000 Total net loss = $1,000
The only time a wash sale has any affect at all is when it happens over a tax year, then the wash sale is disallowed in one tax year but is taken into account the next year (or whenever the shares that were purchased to create the wash sale are sold).