Hi All,
I hope everyone is safe and sound.
I couldn’t find any clear information online about the wash sale rules about these possible scenarios. It seems like a gray area in most of the tax articles.
Here are my questions;
Scenario 1
Let’s say; On April 1st, you bought 100 shares of AAL American Airlines for $10 ($1,000). Then, the price of AAL went down $9 on April 5th. You thought it’s a great deal and bought 10 more extra AAL shares for $9 (for extra $90)
Unfortunately, on April 17th, the price of AAL dipped down to $7 and you sold all of your 110 shares for a loss. Eventually, A “wash sale” transaction appeared on your account. These transactions happened within the wash sale window. According to my calculations, you lost $300 from the sale of your 100 AAL shares and $20 from the sale of 10 AAL shares. Are you allowed to claim that $320 total loss on your taxes now? On a YouTube video, a guy said that “If you buy even 1 extra share during the wash sale window, you’re disallowed to claim the total loss”. That is very confusing to me. As far as I know, there’s a cost basis adjustments for these situations but that’s not very clear to me if you sell all of your stocks before 30/61 days with a loss.
Scenario 2
You bought 100 shares of AAL American Airlines for $10 ($1,000) on April 1st. Then, the price of AAL went down to $9 on April 5th and you bought 50 more AAL shares for $9 ($450).
On April 7th, this time the price of AAL went up to $9.5 and you sold all of your 150 shares. What happens in terms of capital gain/loss in this case? Again, it happened within the famous wash sale window. According to my calculations, you lost $50 from the sale of 100 AAL shares but you gained $25 from the sale of 50 AAL shares. Are you allowed to claim that $25 total loss now? Because you may still have a wash sale rule on your transaction.
Scenario 3
Again, you bought 100 shares of AAL American Airlines for $10 ($1,000) on April 1st. Then, the price of AAL went down to $9 on April 5th but this time you bought 80 more AAL shares for $9 ($720).
On April 10th, the price of AAL went up to $9.75 and you sold all of your 180 shares. What is the capital gain/loss situation now? All of these transactions happened within the same wash sale window. According to my calculations, you lost $25 from the sale of 100 AAL shares but you gained $60 from the sale of 80 AAL shares. In this case, what is our taxable gain? Is it $60 or $35?
Thank you!
