I'm not sure if the wash sale rule applies. Here's my situation:
Since the 8/21 "purchase" was within 30 days of the 8/29 sale, I guess the 8/29 loss is a wash sale. But reading "When the Rule Does Not Apply" in wash rule article at Zacks, it might not be one after all. So is the 8/29 sale a wash sale?
If the 8/29 sale is a wash sale, I'd think the disallowed basis would get added to the basis for the purchase that made it a wash sale -- the 8/21 purchase. But if I add the basis there, I get credit for the loss on 8/29 after all, because the 8/29 sale is made up entirely of shares "bought" on 8/21. That seems like exactly what the wash sale rule is supposed to disallow. So, to which transaction's basis should I add the loss?
You're saying you bought shares on 8/21 and sold them on 8/29 (designated lot).
There's no wash sale there since there was no purchase of identical shares (besides the ones you are selling) within the period of thirty days around 8/29.
Separately,
you do have a small loss on the 187 shares to cover, namely a commission, and your form 8949 should reflect that.
"I get credit for the loss on 8/29 after all"
When you finally sell the identical shares with adjusted basis this is exactly what happens. No problem there.
correction it is the earliest shares.
That would be 5/23
when you sold 488 shares, those were 5/23 shares.
when you sell you sell FIFO,
if there's any 5/23 shares left you adjust their basis to the extent possible.
if there's any loss unallocated then you adjust the 8/21 shares
until the loss is entirely allocated.
if you had a profit on the 5/23 shares then none of this matters.
Thanks for the replies!
Still unsure because I didn't sell FIFO, I chose the lot "bought" on 8/21 to sell on 8/29. The shares sold on 8/29 are recorded as the ones purchased on 8/21 in brokerage website / documents.
You're saying you bought shares on 8/21 and sold them on 8/29 (designated lot).
There's no wash sale there since there was no purchase of identical shares (besides the ones you are selling) within the period of thirty days around 8/29.
Separately,
you do have a small loss on the 187 shares to cover, namely a commission, and your form 8949 should reflect that.