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MWynne, after trading idiotically (his phrase) asks:


Trade 1: Buy 1000 WASHX 12/1
Trade 2: Sell 1000 WASHX 12/8
Trade 3: Buy 1000 WASHX 12/15 (making trade #2 wash sale #1)
Trade 4: Sell 1000 WASHX 12/22
Trade 5: Buy 1000 WASHX 1/23/99

Is cost basis for Trade 4 the cost of Trade 1? and does it stay that way for every wash sale thereafter? <<

Just follow the rules. The disallowed loss is added to the cost basis of the "replacement" stock.

So the CostBasis of the stockbought on Jan 23 is

CB = { T5 + (T3-T4) + (T1-T2) } * 1000 shares

(where T5 is the share price of trade-5, etc...
and (T3-T4) and (T1-T2) is the the per-share loss for each of the first two wash-sale transactions.

- Danny
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