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I understand the Wash Sale rule with regards to individual lots of stock, but how is it handled with the fractional nature of mutual fund shares (eg. you may sell 145.675 shares for a loss, then buy back 165.234 shares within 30 days). How are fractional shares treated? Please don't tell me that you have to do proportional analysis on the shares bought & sold, and also with relation to basis, etc, that would drive me crazy. I have always assumed that, unless the ACTUAL identical number of shares were bought back, that substantial equivalency didn't exist, and the wash rule didn't apply. However, more & more, software from mutual funds seems to highlight these transactions as wash sales, which would alert the IRS, even if the reason may be invalid. Anyone know for sure?

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