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Financial Planning / Tax Strategies
|Subject: Wash Sales||Date: 5/9/1997 9:00 AM|
|Author: dmeredit||Number: 15 of 121219|
A fairly simple question...more of a confirmation than anything...
I have read your Wash Sale FAQ and have studied a couple of chapters in a Tax book about it, but, just before I start dropping the appropriate items into my Quicken register, I thought I better confirm my understnding first.
In this case, I purchased 500 shares of ATCT at about $14 (ouch). Recently, when the stock was trading at $3 1/4, I purchased more, on the basis I could afford it and I believed the Company was undervalued at that point. When the Company reached $5, I decided to sell my 500 low cost basis shares (as I was still within the 30 day wash sale period) and take a quick profit to invest eslewhere.
Now, on most trades, my E-Trade discount broker allows me to select specific shares on a sale. For some reason, on this trade, it did not and the trade executed immediately, selling the high cost basis shares (which I had intended to hold onto as a long term play).
With my understanding of the wash sale, I cannot record the sale as a loss. Instead, I have to account for my current 500 (originally low cost basis) shares as having a price of cost basis of 12.25 ((500*14+500*3.25 - 500*5) / 500).
If the above is correct, then I am assuming that, if I subsequently sell my remaining shares at say, $10, then I can claim a loss of $2.25 per share on the 500 shares. I am also assuming that this applies whether or not this is a long term or short term capital gain.
Thanks for your help.
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