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Does the wash sale rule apply when you sell all shares (some at a loss) purchased in different lots, of the same stock, if some of the lots were purchased within the 30 day period before the total liquidation of all of the position.

For Example:
Sept. 1) Bought XYZ 100 shares at $10.00 = $1000
Sept. 3) Bought XYZ 100 shares at $6.00 = $600
Total = $1600

Sept. 15) Sell XYZ 200 shares at $8.00 = $1600

Loss on first lot = $400
Gain on second lot = $400


***'pears to me as if you lost $200. on the first lot
and gained $200. on the second lot.

The sale of each lot is treated separately. If you were not to buy any more of the same stock, you would end up with no capital gain or loss.

I have sometimes used this method to recover losses from an ill-timed initial entry. Do the wash sale rules apply here, no matter how many lots were purchased to average down, and then all of the position was sold? I know I must claim the gain on the second lot, but will I be allowed to claim the loss on the first lot.

***The wash sale rule would apply if you purchased the same stock 30 days before, or 30 days after, you sold the losing stock.

If I repurchase this security within 31 days will the loss be disallowed and the wash sale rule apply?

***The loss is added to the basis of your newly purchased stock. It is not really lost. When there is some finality to what you are doing with the stock, and a 30 day period has passed without your having repurchased the same (or substantially same) stock, you would have a reportable gain or loss.

"Jack"
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