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You don't have a Wash Sale due to the first profitable trade because it was closed prior to the second purchase. As you (would have) said, "how can that be replacement shares?"

Now, however, if you purchase within 30 days of the losing sale the losing sale IS a wash sale and the loss must be aded to the basis of the replacement shares. In effect the loss is frozen until you make a profit (inlcuding the loss) or sell with no replacement for 30 days. ed
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