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Author: Nakor Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121180  
Subject: Specific example of wash sale with options. Date: 1/15/2001 11:52 AM
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I'll cut to the chase - I've done this in two different software programs and gotten different results. My trades in FY2000 in RMBS:

6/27: buy 40 for 4371
6/27: sell 40 for 4345 = -26 wash
7/11: buy 50 for 4507
7/14: sell 50 for 5237 = +730 (-26 wash) = +704
(up to here is all FY2000 since sold all for gain)
7/17: buy 50 for 5340
7/27: buy 35 for 2425
7/31: sell 25 for 1841
10/5: buy 125 for 9970
10/23: buy 400 JAN 130 CALLS for 792
10/25: sell 180 for 10745
10/25: buy 700 JAN 75 CALLS for 5272
11/30: buy 22 for 879
12/6: sell 22 for 1145
12/26: buy 125 for 5104

So my final position on 12/31 is 125 shares, 400 Jan 130 calls and 700 Jan 75 calls. It was explained to me that the option shares act just like regular shares when computing wash sales.

The program that made more sense indicated I sold 317 shares for a 769 capital gain for FY2000 -- 704 from the earliest trades and 65 somehow from the 11/30 & 12/6 trades. Then when my options expire worthless on Friday, I will have a capital loss of 7424 for FY2001 on 1100 shares and the basis for my remaining 125 shares will be 8692.

This sounds reasonable to me but I am very confused. I've read the FAQs and earlier messages but am getting hung up on the number of shares to carry forward. I would like to just ignore the options and calculate loss separately but I'm sure the IRS wouldn't like that.

Thanks for any help... if more info is needed I can supply.

Nakor
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