This doesn’t make sense to me.
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Wash sale loss disallowed.... skip December?
- Thread starter KCalhoun
- Start date
This doesn’t make sense to me.
But what if you already obtained a wash sale and have disallowed losses, how do you now eliminate the disallowed losses ??? How do disallowed losses become actual losses??
Let’s say you bought 100 shares of xyz at $100 price and sold them at $50. You lost $5000 in this trade.
Then, within 30 days you bought 50 shares of xyz again so you triggered the wash sale rule. The $5000 loss from your first trade is disallowed. But when you sell the 50 shares of xyz in the second trade, your cost basis will be adjusted up by $5000.
This doesn’t make sense to me.
Exactly... and that's one of the #1 answers within the searches I did related to wash sales and how to avoid them....
Let’s say you bought 100 shares of xyz at $100 price and sold them at $50. You lost $5000 in this trade.
Then, within 30 days you bought 50 shares of xyz again so you triggered the wash sale rule. The $5000 loss from your first trade is disallowed. But when you sell the 50 shares of xyz in the second trade, your cost basis will be adjusted up by $5000.
Very good question, but I wouldn't have any idea because these rules they set in place are made to be confusing and impossible to find a direct answer to.
Working Around the Wash Sale Rule
There are a couple of acceptable workarounds that could help you maintain all or part of your deduction while purchasing substantially identical securities. The first is that a partial deduction can be taken if more stock is sold then repurchased within the 61 days surrounding the sale. For example, if you own 1,000 shares of XYZ and you sell them all at a loss then repurchase 200 shares, you may still be entitled to deduct the loss of the net 800 shares sold. Since the disallowed loss and the other 200 shares will be added to the cost basis of the newly purchased 200 shares, the rest of your loss doesn't exactly disappear; it is simply delayed.
There are a couple of acceptable workarounds that could help you maintain all or part of your deduction while purchasing substantially identical securities. The first is that a partial deduction can be taken if more stock is sold then repurchased within the 61 days surrounding the sale. For example, if you own 1,000 shares of XYZ and you sell them all at a loss then repurchase 200 shares, you may still be entitled to deduct the loss of the net 800 shares sold. Since the disallowed loss and the other 200 shares will be added to the cost basis of the newly purchased 200 shares, the rest of your loss doesn't exactly disappear; it is simply delayed.
I think the wash sale rule is pretty clear. How we interpret and deal with it is the issue.
The basics of the rule is quite understandable yes.
It's just when i receive a 1099 and I'm showing disallowed losses on 2 positions I sold specifically to eliminate my disallowed losses and see disallowed losses I tend to keep questioning why this has occurred.
Working Around the Wash Sale Rule
There are a couple of acceptable workarounds that could help you maintain all or part of your deduction while purchasing substantially identical securities. The first is that a partial deduction can be taken if more stock is sold then repurchased within the 61 days surrounding the sale. For example, if you own 1,000 shares of XYZ and you sell them all at a loss then repurchase 200 shares, you may still be entitled to deduct the loss of the net 800 shares sold. Since the disallowed loss and the other 200 shares will be added to the cost basis of the newly purchased 200 shares, the rest of your loss doesn't exactly disappear; it is simply delayed.
That I believe is true.