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Once a wash sale is triggered by a buy, that buy's basis and holding period are adjusted. The basis is increased by the amount of disallowed loss that matched with it (let's assume 100%). The holding period is extended backwards by the holding period of the sell (this is one method of doing it at least).

What happens if there's a second sale within the adjusted buy's 30 day window? Does the buy get adjusted by the first wash sale and then get adjusted again by the other wash sale? Or is that second sale a non-wash since the only thing it could wash with is already matched to something? This might depend on tax lots and exactly how far the buy is adjusted, but are there any scenarios where it can "double wash"?

Here's one example:

2000-07-01 BUY 1 at $100 (A)
2000-07-02 BUY 1 at $200 (B)
...
2005-07-01 SELL 1 (A) at $10 for a loss of $90
2005-07-02 SELL 1 (B) at $10 for a loss of $190
2005-07-03 BUY 1 at $10 (C)

The sale of A is a wash sale and it washes with C (since you process things oldest-sells-first). C's basis is increased from $10 to $100. Because A was held for 5 years, the new holding period for C takes it well out of range of the sale of B, so it shouldn't be able to wash with it; right?

Another example:

2005-07-01 BUY 1 at $100 (A)
2005-07-02 SELL 1 (A) at $10 for a loss of $90
2005-07-05 BUY 1 at $200 (B)
2005-07-06 BUY 1 at $20 (C)
2005-07-07 SELL 1 (C) at $10 for a loss of $10

The sale of A washes with B (it can't wash with itself), and adjusts B back a day. Does the sale of C was with the adjusted B (it can't wash with itself, so that's the closest buy it can wash with)?

  • I think you need to trim this down to one question, because you're asking way too much in one post. You'll get a much better reception if you simplify your question, my friend. – Daniel Anderson Feb 24 '17 at 1:54
  • Tried to focus the question more – colithium Feb 25 '17 at 18:55

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