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Author: CarlErikson Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 120802  
Subject: Is this a wash sale? Date: 3/14/2000 2:45 PM
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Hello,

Suppose the following transactions take place (for simplicity I am ignoring commissions):

I buy 100 shares of MSFT @ 100 on 2/1/2000

I buy 100 shares of MSFT @ 100 on 2/2/2000

I sell 100 shares of MSFT @ 99 on 2/3/2000 but I identify the shares sold as the ones on 2/2/2000
(this is a loss of $100)

Is this a wash sale? (i.e., my question is - can you have a wash sale because of shares you bought before the ones involved in the sale transaction?)

If so, then the holding period of the shares I purchased on 2/1/2000 would be moved up to 2/2/2000, correct?

Thanks,
Carl Erikson

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Author: pmarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 31744 of 120802
Subject: Re: Is this a wash sale? Date: 3/14/2000 6:04 PM
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<< I buy 100 shares of MSFT @ 100 on 2/1/2000

I buy 100 shares of MSFT @ 100 on 2/2/2000

I sell 100 shares of MSFT @ 99 on 2/3/2000 but I identify the shares sold as the ones on 2/2/2000
(this is a loss of $100)

Is this a wash sale? (i.e., my question is - can you have a wash sale because of shares you bought before the ones involved in the sale transaction?) >>

It's a wash sale. The 30 day period is before or after the sale date.

<< If so, then the holding period of the shares I purchased on 2/1/2000 would be moved up to 2/2/2000, correct? >>

I don't think so. You adjust the basis of the 2/1 shares to add in the wash sale loss, but it doesn't change their holding period.

Phil Marti
Tax Preparer


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Author: edcosoft Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 31749 of 120802
Subject: Re: Is this a wash sale? Date: 3/14/2000 6:45 PM
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<< If so, then the holding period of the shares I purchased on
2/1/2000 would be moved up to 2/2/2000, correct? >>

I don't think so. You adjust the basis of the 2/1 shares to add in the
wash sale loss, but it doesn't change their holding period.

Phil Marti
Tax Preparer


He's right, Phil. the Replacement shares take on the holding period of the wash sale shares. Pub 550, pg 51 third column. Ed

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Author: pmarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 31759 of 120802
Subject: Re: Is this a wash sale? Date: 3/14/2000 9:22 PM
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<< He's right, Phil. the Replacement shares take on the holding period of the wash sale shares. >>

Thanks, Ed.

Phil Marti

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Author: edcosoft Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 31763 of 120802
Subject: Re: Is this a wash sale? Date: 3/14/2000 9:42 PM
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<< He's right, Phil. the Replacement shares take on the holding period of the wash sale
shares. >>

Thanks, Ed.

Phil Marti


I'll never forget that one. Some contributor posted his situation where he deliberatly created a wash sale and turned a long term loss and what would have been a a short term gain into a net long term capital gain. In the long run, with other trades concerned, I don't know it he helped any, but I'll never forget that rule. Ed

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