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Please Help! (I know I posted an earlier Wash Rule question, but for the life of me I cannot now find it)

Please be tolerant and help me with this problem.
Here is what I have done.

6/30/99 Bought 50 YHOO @160
7/2/99 Bought 50 YHOO @177.0
7/13/99 Bought 50 YHOO @151.1875
7/29/99 Bought 50 YHOO @134.5625

At this point I decided YHOO was a little risky and got nervous. So:

8/13/99 Sold 50 YHOO @132.5625
(The shares sold were those purchased for 177 on 7/2/99)

This means that I bought "like" shares 30 days before I sold the shares. (I have purchased no more shares since the sale.)

My loss on the shares is $2,262.00 (this includes broker fee). But since I bought the equal shares within the 30 days before I sold these shares, what am I supposed to do on my income taxes for this year?

This whole "wash rule" thing is blowing my mind. It is very confusing and I don't see much purpose to it -- but that is not the question.

Please help. If I cannot claim my loss, what happens to it?

Please explain as you would to "Wash Rule for Dummies".
I think I need an explanation a 6-year-old might understand.
Many thanks.

AngelMay : )
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