Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Z Best Place to Talk Stocks -- Ignore unavailable to you. Want to Upgrade?

To: Ron McKinnon who wrote (19427)	3/3/1999 7:13:00 PM
From: Iceberg	Read Replies (2) \| Respond to of 53068

Ron, re: the "straightforward" <g> wash sale Thank you. What you described does seem straghtforward. You said... >you need 3 transactions to kick in the wash; 2 buys, 1 sell if one of the buys is 30 days before or after the sell then no loss can be taken but you can adjust your cost basis on the shares held But what I'm not clear about is what happens on the 4th transaction. Is the cost basis still adjusted? And if so, is the sell basis adjusted too? Let's say the following transactions [assuming equal numbers of shares] happen for one stock within a few days, or at least within the 30-day window... Buy at 22: Sell at 16. [what ordinary humans would call a 6-point loss] Buy at 18: Sell at 26. [what ordinary humans would call an 8-point gain] As I understand it, the cost basis would be adjusted to 20 in the absence of the 4th transaction at 26. Right? Accordingly, would the sell basis also be adjusted to 21 once the 4th transaction at 26 took place? If so, then there would be an effective 1-point gain from 20 to 21 as opposed to a 2-point gain if the transactions were figured separately; that is, a 6-point loss plus an 8-point gain being a net 2-point gain. So instead of the IRS getting tax on 2 points, the "wash rule" would produce tax for the government on only 1 point? I'm not trying to make this complicated, just trying to understand it. If you'd rather not get deeper into these specifics, that's ok. However, if there is a "straightforward" answer, similar to the one you just gave, I'd appreciate hearing it. Again, thanks, Ice