Message Font: Serif | Sans-Serif
No. of Recommendations: 1
<<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

Print the post  


In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.