I have 2000 stock bought in April 2005 at $ 2, this company is now $ 0.22. What are the rules for a wash sale of this stock. Thanks

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Originally Posted by amendoza1

I have 2000 stock bought in april 2005 at $ 2, this company is now $ 0.22. what are the rules for a wash sale of this stock. thanks

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You may not deduct losses from the sale or trade of stock in a wash sale. A wash sale is when you sell/trade stock resulting in a loss and repurchase/trade substantially the same stock or security within a 30 day period after the initial sale/trade. If a wash sale results and the loss is not allowed, add the non-deductible loss to the basis of the new stock/trade.

Delite hit it right on the nail head!

I have nothing to add!

In other words, if I sold 1000 shares of xyz at $10, which had originally been purchased at $90, I have an $80,000 loss, If I bought back 1000 shares in 29 days, I have a wash sale. So, should I sell 1000 shares again one year later or whenever, @ e.g. $11, my cost for IRS purposes would be $80,000 plus $79,000 for a total reportable loss of $159,000.

Is this correct? Could you please reply to me at: [email protected]

Many thanks.

No, your original basis applies plus whatever your secondary basis was. In your example, your original basis is $90K. Let's assume your 29-day cost was $15,000, so, in total, your basis is $105,000.

If you then sold the 1,000 shares at $20 a share at a time beyond the wash sale restrictions for $20,000, your total loss would be $85,000.