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Mea culpa (again !)...
KAT is 100% correct that I blew it in not noticing the application of wash-sales rules becasue of the 2nd buy/first sale happening within 30 days. Oops.

As always IRS publications are good sources:

Identifying (or not) specific shares to be sold: IRS Pub 550, page 39. {indicating that you must use First-In, First out}

Wash sales (with some worked examples) : page 49 {indicating that your remaining 100 shares acquire a new basis equal to their cost basis + the disallowed loss}
(page 50 describing how to enter the wash sale on your sch D, page 59 shows how to compute holding period ... in your period it extends from original Jul 96 buy.)

Nice heads up KAT.

In my house, I just leave all these questions to my wife, who never gets it wrong (and immediately told me why I was wrong here and calculated the new basis in her head while I read the original post out loud... Geez !)

- DD
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