Deferred loss for wash sale

[sgaitonde]

Dear All,

I have a question about cost basis and wash sale. I bought 100 shares of A for $100. However,  I felt that I bought them at a higher price so I sold them for $90 making a loss of $10. I immediately bought 90 shares of A for cost of $125 and sold couple of days later for $145.

Now my questions are:
1) When I bought the shares second time it tiggered wash sale. However, when I sold second set of shares it immediately triggered net capital gain of $20-$10 = $10. But my brokerage account shows a deferred loss $9. What is that for? I already have a positive capital gain of $10 overall.

2) How does ‘Deferred loss’ affects me in taxes if I have net positive gain? Also, is there any way I can get rid of these ‘Deferred losses’?

Regards,
Sandy

[M-MTax]

Wonder if the brokerage looked at this as a wash sale for 100 shares and you only bought 90 shares to replace the 100 you sold and then sold those 90 for a gain. Would make sense from a percentage point of view.

[sgaitonde]

They have tagged only 90 shares of the original purchase as wash sale since I bought only 90 shares in the second lot.

Regards,

Sandy

[M-MTax]

Yeah I think that's the problem. If you had bought 100 shares then it might have been different.

[sgaitonde]

I do not think so since the wash sale applies to the # of shares bought again. But my questions were about something else.

Regards,

• Sandy

[M-MTax]

Call your broker and ask. The deferred loss should be added to the basis of the new shares you bought.