Hypothetical:
You purchase 100 shares of stock XYZ on December 15, 2021 for $10/share ($1,000). You sell the 100 shares of stock XYZ the same day, December 15, 2021 for $9/share ($900), taking a loss of $100.
On December 16, 2021, you again purchase 100 shares of stock XYZ for $7/share ($700) and sell all 100 shares the same day, December 16, 2021, for $1/share ($100), taking a loss of $600.
My understanding is that you violated the wash sale rule the moment you purchased 100 shares of stock XYZ on December 16, 2021 at $7/share. My understanding is also that your cost basis on the December 16, 2021 shares is $8 (the December 16, 2021 purchase price of $7/share + the $1/share you lost on December 15, 2021).
Two questions:
(1) When I sell the 100 shares of stock XYZ on December 16, 2021, is my realized loss $700 ($100 lost on December 15, 2021 + $600 lost on the December 16, 2021 purchase and sale)?
2) If I wait 40 days from December 16, 2021 to buy the stock again and avoid the wash sale rule, can I write off my losses from the December 2021 trade on my 2021 tax return? Or will those losses be held in suspense until I can no longer violate the wash sale rule again and roll over to the 2022 tax year?
