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David Schwartz
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Under US law, the second sale is technically a wash sale. The definition of a wash sale in the United States is a sale of a security at a loss in which you bought any other shares of an identical, or substantially similar security, within 30 days before or after the sale.

All the elements are met here. The sale on Tuesday was a sale at a loss. The purchase on Monday was for different shares of the same security and it was within 30 days.

So the answer to your question is yes. As a consequence, you must add the loss in the second sale to the basis of the first stock. This results in the first sale being reported as a loss for tax purposes.

The time at which the shares in the substantially identical security are sold has no effect on the operation of the wash sale rule.

The wash sale rule is intended to catch people who close positions just to mine them for tax losses where they have another purchase that prevents the loss from really being taken. However, it is not perfect and it does occasionally apply to situations in which there is absolutely nothing nefarious going on. Fortunately, it doesn't really do any harm here -- it just moves the loss in time by a small amount.

David Schwartz
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  • 45