Thank you so much for the clarification. I have a follow-up question which relates to the second example provided by IRS here: https://taxmap.irs.gov/taxmap/pubs/p550-026.htm#TXMP212cbd13 (reproduced below)
You are an employee of a corporation with an incentive pay plan. Under this plan, you are given 10 shares of the corporation’s stock as a bonus award. You include the fair market value of the stock in your gross income as additional pay. You later sell these shares at a loss. If you receive another bonus award of substantially identical stock within 30 days of the sale, you cannot deduct your loss on the sale.
Does this bonus not count as ‘compensation’ because it’s a one-time award? Or is it a wash sale because you personally sold the shares instead of them getting automatically sold for taxes?
Also, does this mean if I sold shares with a loss outside the automatic sell-to-cover schedule, it would be a wash sale, e.g. I vested 70 stocks on June 15, sold 50 of them at a loss on June 30 and vested the next batch on July 15?
Thanks a lot!