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Shoot, a math error in my first response!
(I can solve differential equations, but arithmetic still gives me the occasional problem!)

In the previous examples, 85 - 75 = 10 not 15 (duh), so the losses on the 10 extra shares sold are deductible, those on the 75 are added to the basis as stated before.

Full example:

Never owned MSTR before
5/6/97: buy 180 MSTR at 26.75 + 12 commisions = 4827 basis
5/13/97: sell 180 MSTR at 23.75 + 12.15 commisions,
basis = 4827 + 12.15 = 4839.15, sale = 180 * 23.75 = 4275, loss = 4839.15 - 4275 = 564.15

If I do nothing further, the loss is fully deductible, but

5/29/97 (less than 30 days later): buy 160 MSTR at 26.5 + 12 commisions = 4252 basis

Now, I have a wash-sale on 160 shares, so the basis needs to be adjusted by the appropriate part of the loss:

wash-sale loss = 564.15*(160/180) = 501.47
so the adjusted basis on the 160 MSTR = 4252 + 501.47 = 4753.47

the loss on the other 20 shares is deductible:

basis = 4839.15*(20/180) = 537.68
sale = 4275*(20/180) = 475
deductible loss = 564.15*(20/180) = 62.68


One other case I have thought of: If you own XYZ, buy more XYZ, sell ALL of XYZ and then don't buy any back for at least 30 days, then any losses are deductible and any gains are taxable.


Mark
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