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Author: TMFTaxes Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121169  
Subject: Re: wash sale - is to defer the lose Date: 12/30/1999 4:38 PM
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<<If I understand the rule, when I have a lose that has wash sale rule applied to, my lose is really not lost, but added on to the new purchase cost base. Therefore, it is effectively deferred its calculation until I close the new purchase.

Am I correct on this point?>>

That's basically correct. And you can read more about the wash sale issues, how wash sales are applied, and the computations that you must work through to adjust the basis on the "repurchase" of shares in the Taxes FAQ area. You might want to check it out for a more detailed discussion.

<<If I am correct on this, then can I elect to apply wash sale rule for those trades (just to play safe) that really have no clear guidelines defined and defer the lose to my new trade? Examples would be those option trades for the same stock but with differect strike prices. I will also post the same question to the Fairmark Message Board.>>

Wash sales are not really something that you want to "elect". They are generally something to be avoided if at all possible. And, generally, option trades for the same stock (but with different strike prices) are generally not considered "substantially similar", and would therefore not be subject to the wash sale rules.

Hope this helps...
TMF Taxes
Roy


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