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Author: pmarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121312  
Subject: Re: wash sales for shares with zero gain/loss? Date: 8/12/2001 1:54 PM
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(1) 100 shares purchased on 06/01/2001 at $40/share

(2) 100 shares purchased on 07/02/2001 at $50/share

(3) 100 shares purchased on 08/01/2001 at $30/share

(4) 100 shares from 06/01/2001 redeemed on 08/08/2001 at $40/share

(5) 100 shares from 07/02/2001 redeemed on 08/09/2001 at $40/share

Would/could step #4 be considered a wash sale or not?


No. Without a loss, there can't be a wash sale.

<snip>

If not, then the only shares still held after step #4 are 100 shares purchased on 07/02/2001 and 100 shares purchased on 08/01/2001. Next, step #5 would result in a wash sale, where there would be a disallowed $10/share loss on the shares purchased on 07/02/2001. The replacement shares bought on 08/01/2001 would have their effective purchase date changed to 07/02/2001, and their original cost basis of $30/share would be increased by $10/share to $40/share.

Right.

Now if steps #4 and #5, respectively, became

(4) 100 shares from 06/01/2001 redeemed on 08/08/2001 morning at $40/share

(5) 100 shares from 07/02/2001 redeemed on 08/08/2001 afternoon at $40/share

then I don't see any reason for a difference in the tax results.


There isn't a difference. You have 100 shares with a basis of $40 and no bottom line recognized loss.

Maybe someone else can find a better way of explaining this to you.

Phil Marti
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