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Financial Planning / Tax Strategies


Subject:  Re: wash sale Date:  2/21/2000  8:39 PM
Author:  Bob78164 Number:  29520 of 127753

smfish writes:

Perhaps you can check my calculations on the Wash Sale (I hope, my first and last wash sale). I purchased stock at various times in 1999, for a total of 230 shares at a total cost of $23,272.74. On 09-20-99, I sold 230 shares for $19,057.99, for a $4,214.76 loss. Bought back 100 shares on 09-22-99 for $9,044.50. one hundred shares of two hundred thirty shares is .443%, so .566% of 4214.76 (loss) is $2,385.55, which I guess is my loss? Remainder of the loss, 4,214.76 minus 2,385.55 is $1,829.21, which I guess is added to the cost of 100 shares, $1,829.21 + 9,044.50 = 10,873.71, for my new cost basis on 100 shares.

I reply:

You're correct that you have a wash sale, but you can't divvy up the basis of the underlying shares in the way you describe. You need to calculate for each separate purchase whether you had a gain or a loss. Once you've located the first 100 shares on which you sustained a loss, you can stop. The loss on those 100 shares is disallowed and added to the basis of the shares you purchased on September 22. You may recognize your remaining loss.

This analysis assumes that you purchased no shares on or after August 21, 1999. If this assumption is wrong, than you may have had another wash sale. If you post back with dates and figures, someone may be willing to give you more detailed help. If you do, please format the figures to be easily readable. Thanks. --Bob
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