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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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<< 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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<< 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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<< 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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<< 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