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<<hi, first post here>>

Welcome...

<<......this wash rule thing confuses me.....>>

Well, have you read my article on the wash sale issues in the Taxes FAQ area. It might clear some things up for you. Check out that article at:

http://www.fool.com/taxes/2000/taxes001006.htm

<<it would seem to me that if i bought 100 shares of ABC @ $100 and sold them @ $90 only to buy them back within 30 days @ say $80, that i would effectively be lowering my cost basis - inevitably wether i made a profit or loss on my new cost basis it would all work out the same regarding capital gains/losses......can someone please explain this better to me preferably as it applies to canadians>>

The law applies the same to residents and non-residents alike. Again, in my article I explain that Uncle Sammy does not want to you claim a tax loss on your tax return, but retain the same economic interest in the shares for the future. In your example, you would have a $1,000 loss that would reduce your US taxes, BUT you would still be holding the very same shares of stock. So you actually have no ecnonmic risk but you have generated a tax loss. Uncle Sammy doesn't like that.

<<.....also how would this apply to the JDS/SDL merger which may or may not happen.>>

Check out my post about 3 back regarding my feelings on the wash sale rules and how they apply to "potential" mergers.

TMF Taxes
Roy
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