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Subject:  Wash Sale Scenario Date:  1/25/2001  2:48 PM
Author:  jimmonroe56 Number:  44831 of 130176

Hello all,
This is a bit long, so thanks to all who can offer an opinion.

I believe I understand how this should be calculated but some confirmation would be nice.

11/1/2000, I purchase 200 shares of XYZ @ 20 per share.
11/15/2000, I sell 200 shares of XYZ @ 15 per share.
12/1/2000, I purchase 150 shares of XYZ @ 16 per share. As of 1/31/2001, I still hold the 150 shares.

My broker commission is $20 per transaction.

So if not for my repurchase on 12/1 I would have the following:

The cost basis of my 200 shares purchases on 11/1 is $4020, 200 times 20 plus the $20 commission.

The processeds from 11/15 would be $2980, 200 times 15 minus the $20 commision.

My net loss would be $1040.

Now let's introduce wash sale rule. Since I repurchased some of the stock on 12/1 I have to account for the wash sale.

Since on 12/1 I repurchased 75% of the shares that I sold on 11/15, I can only take 25% of the capital loss. So the amount of my capital loss would be %25 of 1040, or $260.

On my schedule D for the year 2000, I would only reference the following:

50 shares of XYZ purchased with a cost basis of $1005 (%25 of 4020), 50 shares of XYZ sold with proceeds of $745 (25% of 2980), giving a net loss of $260.

The part of the loss that I did not take due to the wash sale was $780. So if I sell my remaining shares of XYZ in 2001, my cost basis of those shares would be $2420 (150 times 16 plus the $20 commision) plus the $780 that I could not take from the year 2000, for a cost basis of $3200 for these 150 shares.

I think I have this right, but would appreciate any comments.

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