Capital Gains and Losses
Questions and comments about tax rules for buying and selling stocks, mutual funds, real estate and other assets.
Wash Sale rules and tax lot size and sale timing
Posted by: Cassy93, July 12, 2017 10:25PM
Hello,

I'm a bit stuck when it comes to determining the disallowed losses on sales of the same stock, but in different lots, when one of the lots was purchased within 30 days of the same of all lots.

To illustrate, say I purchased the following lots of XYZ Company:

1. 100 shares on 9/29/09 for 5k
2. 50 shares on 12/18/09 for 2750
3. 25 shares on 12/29/09 for 1125

Today, 1/7/10, I want to sell all shares i bought for 4000. Would any of the 1k loss be subject to wash sale Rules? If so, would that still be the case if I decided to sell the initial shares first and the rest later in the day or omorrow, 1/8/10?

Many Thanks in advance for your assistance.

Re: Wash Sale rules and tax lot size and sale timing
Posted by: Art, July 13, 2017 12:11AM
Since there remain no replacement shares, this is not a wash sale. The loss is 8900 - 4000.

Re: Wash Sale rules and tax lot size and sale timing
Posted by: Cassy93, July 13, 2017 01:44AM
Thank you so much for your prompt reply. What if only the shares purchased within the last month were purchased initially and 25 of the original 100 shares were sold either later that day or the following day? Would any of the remaining shares be considered replacement shares and reduce the allowable loss deduction?

Also, section 1091 of the code does state as an example "For example, a taxpayer acquires 200 shares of the only outstanding stock of a corporation. Less than 30 days after its acquisition, he sells 100 of these at a loss. The loss will not be disallowed unless during the period prescribed in section 1091(a) of the code he acquires,..." Why would the remaining 100 shares of his position not count as replacement shares? Is it just because he didn't sell off the entire lot?

I'm trying to understand the timing of the rule's application when dealing with selling lots in addition to the one which could cause the wash sale in the first place.



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