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Author: AngelMay Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121341  
Subject: Re: Oh No! The Subject That Wouldn't Die... Date: 9/24/1999 12:39 PM
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I wrote: how about this one (from my earlier post): What if I sell the offending 50 shares of YHOO (those that made the sale of the other 50 shares a wash sale) before this tax year ends. Does that eliminate the wash sale?

Bob answered: I'm afraid you'll need to repost it in its entirety. I can't remember the situation and I'm too tired (read, lazy) to look it up. --Bob



Hi Bob. Here is the original problem along with your answer:
-----------------------------------


AngelMay writes (in part):

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)

I reply:

As you surmised, the 7/29/99 purchase makes the 8/13/99 sale for loss a wash sale. Here's how to calculate the consequences.

First, figure out the amount of your "wash loss." In your case, this is WL = (44.4375 * 50 shares) + commissions. Next, calculate the "normal" basis of the replacement shares. In your case, the replacement shares are the shares bought on 7/29/99, so the "normal" basis will be (134.5625 * 50 shares) + commissions. Finally, add the "wash loss" to the "normal" basis of your replacement shares. As far as the IRS is concerned, that sum is your basis in your 7/29/99 shares. In your case, when you eventually sell that sum will be (179* 50 shares) + 2 commissions. --Bob

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The question NOW is: If I sell the 50 shares purchased on 7/29/99 (the ones you said made my sale a wash sale) -- if I sell them before this tax year is over, will that eliminate the wash sale? Many thanks for all your trouble with this -- but I am finding it quite educational! (And the problems are REAL -- I really did do this crazy stuff!)

AngelMay :o)
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