Basic info ... the unallowed losses on wash sales are added to the basis of the new stock purchased. Stop doing wash sales and the losses are automatically released on the final sale. Do not repurchase that stock for another 30 days to stop the wash sale restrictions.
For instance ...
Buy XYZ for $10 and sell for $5 ... reported loss is $5 if you don't repurchase the stock.
But if you rebuy the stock within 30 days say at $4 then the prior loss is not allowed and will be a zero gain/loss on the return for the original sale and the unallowed loss is added to the basis of the new stock bought so now you have a basis of $9 ($4 + $5).
Sell that new stock for $10 and you have a $1 gain, sell it for $7 and you have a $2 loss which is deducted on the return UNLESS YOU BUY IT AGAIN and the wash sale rules comes back into play.
Good news is the broker should be keeping track of this for you and it should be handled on the 1099-B you get next year ... talk to the broker to see how they handle this and/or do some reading on the subject.
