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I was wondering if there would be any information on whether the sale of shares with zero gain/loss could legitimately qualify as a wash sale. Put another way, when sale price equals cost basis for a sale of shares, it could be considered a loss just as correctly (or just as incorrectly) as it could be considered a gain, so the question is whether the taxpaying investor could use the benefit of the doubt to his/her own advantage. Here is an example:

100 shares of XYZ are purchased at n = \$40/share on 06/01/2001.

100 shares of XYZ are purchased at \$50/share on 07/02/2001.

100 shares of XYZ are purchased at \$30/share on 08/01/2001.

The 200 shares of XYZ purchased on 06/01/2001 and 07/01/2001 are sold at \$40/share on 08/08/2001.

The question would be (1) whether the 100 shares purchased on 08/01/2001 could be considered to have “washed away” the 100 shares purchased on 06/01/2001, hence allowing the \$10/share capital loss on the 100 shares purchased on 07/02/2001 to be realized (for a total loss of \$1,000), or (2) whether the 100 shares purchased on 08/01/2001 would need to be considered to have washed away the 100 shares purchased on 07/02/2001, hence disallowing the capital loss on those shares (and realizing a zero gain/loss on the 100 shares purchased on 06/01/2001).

In graphical terms, suppose that any realized gain/loss on the 08/08/2001 sale above were considered as a function of n above. There is obviously a discontinuity in such a graph at n = \$40/share: as n linearly decreases from \$40/share, then there is a net realized gain (all from the 06/01/2001 shares) which linearly increases from \$0, but as n linearly increases from \$40/share, then there is a fixed net \$1,000 realized capital loss (all from the 07/02/2001 shares, assuming that the 06/01/2001 shares are to be considered the “washed away” shares for this case). So the question is whether such a graph at n = \$40/share should be made to behave more like n < \$40/share (to the IRS's benefit) or should be made to behave more like n > \$40/share (to the taxpayer's benefit).

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