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The wash-sale rule applies to stocks, bonds, mutual funds, ETFs, options, futures and warrants. ... So you won’t be able to claim a loss on the first lot of 100 shares, and you’ll have to add ...
After a sale is identified as a wash sale and if the replacement stock is bought within 30 days before or after the sale then the wash sale loss is added to the basis of the replacement stock. The basis adjustment preserves the benefit of the disallowed loss; the holder receives that benefit on a future sale of the replacement stock.
Most simply, if "tax-loss harvesting is not done properly, it will create a wash-sale that will eliminate the tax benefits of the buying and selling". [9] The investor can employ a number of techniques to avoid triggering the wash sale rule. The investor can wait 30 days to repurchase the security. [10]
A wash sale occurs when you sell an asset for a loss but have purchased the same asset within 30 days before or after the sale. Wash sales are specifically excluded from being claimed on your return.
The individual lots of 100 shares are typically not held separate; even in the days of physical stock certificates, there was no indication which stock was bought when. If the taxpayer sells 100 shares, then by designating which of the five lots is being sold, the taxpayer will realize one of five different capital gains or losses.
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