Does cost averaging contribute to wash sales?
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Level 2

Does cost averaging contribute to wash sales?

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!

 

 

2 Replies
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Level 6

Does cost averaging contribute to wash sales?

"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.

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Level 15

Does cost averaging contribute to wash sales?

Q.  Does this contribute to wash sales?

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

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