topic Does cost averaging contribute to wash sales? in Deductions & credits

Does cost averaging contribute to wash sales?

crimson91 — Mon, 21 Sep 2020 00:45:50 GMT

For example, a stock had a price of $10, and fell to $8 a month later.

I bought 1 stock at $10 on January 1st.

I bought another 1 stock at $8 on February 1st (cost averaging).

Then, the stock increased to $9 later.

I sold both stocks at $9 on February 15th.

I bought the 2nd stock (the one at $8) less than a month from the time I sold both the stocks. Does this contribute to wash sales?

Thank you!

Critter-3 — Mon, 21 Sep 2020 00:59:56 GMT

"Cost averaging" is an accounting concept and is not used for income taxes or wash sales. Your broker should be keeping track of the basis for you.

Hal_Al — Mon, 21 Sep 2020 13:54:49 GMT

Q. Does this contribute to wash sales?

A. No. Since all the stocks were sold, the wash sale rules do not apply.