Is this a wash sale, yes or no?

[wxytrader]

You have to consider your FIFO cost, not your weighted cost.

Buy 100 shares at $10
Buy 100 shares at $5
Weighted cost = 200 shares at 7.50

However if you sell 100 shares, you now have 100 shares at a cost of $5.
If you sold 101 shares, you now have 99 shares at a cost of $5.


These are the numbers that the year end spreadsheet from your broker will be using for tax.

In your scenario you bought 50 shares @ $25 = $1250
Then bought 1000 shares @ $5 = 5000
Total: $6250

You sold 50 shares @ $6 = $300
You sold 1000 shares @ $6 = $6000
Total: $6300

Profit: $50
You will pay tax on $50

 

[S2007S]

You have to consider your FIFO cost, not your weighted cost.

Buy 100 shares at $10
Buy 100 shares at $5
Weighted cost = 200 shares at 7.50

However if you sell 100 shares, you now have 100 shares at a cost of $5.
If you sold 101 shares, you now have 99 shares at a cost of $5.


These are the numbers that the year end spreadsheet from your broker will be using for tax.

So in my break down that's not clear enough. ???


I bought 50 shares and then 1000

And sold the entire lot of 1050 shares


I just don't understand how there can possibly by a wash in my transactions
If I sold at a profit.

 

[ph1l]

What if the 50 shares were bought less than 30 days before the sale

But still sold for a profit?

Yes, there would be a wash sale on those 50 shares.
https://www.costbasistools.com/wash/wash.php

So, the $950 loss is a wash sale and is disallowed. This gets added to the basis of the second purchase. The cost basis is 5,000 + 950 == 5,950.

The sale of 1,050 shares at 6.00 gives you proceeds of 6,300. Subtracting the 5,950 basis results in a short-term gain of $350. So, the disallowed loss from the wash sale is essentially washed away.

 

[wxytrader]

So in my break down that's not clear enough. ???


I bought 50 shares and then 1000

And sold the entire lot of 1050 shares


I just don't understand how there can possibly by a wash in my transactions
If I sold at a profit.

I was just pointing out that you were getting the weighted average cost when the tax will be based on the fifo transactions.

 

[S2007S]

Yes, there would be a wash sale on those 50 shares.
https://www.costbasistools.com/wash/wash.php
View attachment 333756

So, the $950 loss is a wash sale and is disallowed. This gets added to the basis of the second purchase. The cost basis is 5,000 + 950 == 5,950.

The sale of 1,050 shares at 6.00 gives you proceeds of 6,300. Subtracting the 5,950 basis results in a short-term gain of $350. So, the disallowed loss from the wash sale is essentially washed away.

So since I pulled out a profit there should not be a wash sale is what you are saying?

 

[S2007S]

The broker emailed.me back after researching and said it's a WASH sale...


Wow....

Absolutely baffling


I sold it for a profit.

I bought it once. Bought again to cost average in and sold the entire lot in one trade for a gain.

 

[S2007S]

Yes, there would be a wash sale on those 50 shares.
https://www.costbasistools.com/wash/wash.php
View attachment 333756

So, the $950 loss is a wash sale and is disallowed. This gets added to the basis of the second purchase. The cost basis is 5,000 + 950 == 5,950.

The sale of 1,050 shares at 6.00 gives you proceeds of 6,300. Subtracting the 5,950 basis results in a short-term gain of $350. So, the disallowed loss from the wash sale is essentially washed away.

The Original shares were bought January 2023

The second lot of shares were bought January 2024

The entire amount of shares were sold within a week for a profit.

 

[ph1l]

So since I pulled out a profit there should not be a wash sale is what you are saying?

No, it is a wash sale. But, if this happened in the same tax year, there is no change to the gain that will be taxed.

Suppose there was no wash sale rule. Then, there would be a loss of $950 on the first 50 shares. But there would be a gain of $1,000 on the next 1,000 shares ($6,000 proceeds minus $5,000 cost). So, the net result is a short-term gain of $50 (I made a mistake before with the $350 gain).

With the wash sale rule the loss of $950 on the first 50 shares would be added to the cost basis of the next 1,000 shares. So, instead of a $5,000 cost basis it would be $5,950. Then the short-term gain is also $50 ($6,000 proceeds minus $5,950 cost).

 

[ph1l]

The Original shares were bought January 2023

The second lot of shares were bought January 2024

The entire amount of shares were sold within a week for a profit.

Then, as I posted before, there is no wash sale.

Your broker apparently thinks you sold the original 50 shares at a loss within 30 days of buying them (e.g., if you bought them December 31, 2023 not in January, 2023).

 

[S2007S]

No, it is a wash sale. But, if this happened in the same tax year, there is no change to the gain that will be taxed.

Suppose there was no wash sale rule. Then, there would be a loss of $950 on the first 50 shares. But there would be a gain of $1,000 on the next 1,000 shares ($6,000 proceeds minus $5,000 cost). So, the net result is a short-term gain of $50 (I made a mistake before with the $350 gain).

With the wash sale rule the loss of $950 on the first 50 shares would be added to the cost basis of the next 1,000 shares. So, instead of a $5,000 cost basis it would be $5,950. Then the short-term gain is also $50 ($6,000 proceeds minus $5,950 cost).

So when is cost averaging into a stock considered a wash sale??

Many people cost average into a stock over time and that's what I exactly did. So everyone cost averaging in is creating wash sales?

Doesn't Cathy woods do tbis with millions of shares a year.