Is my wash sale being calculated incorrectly?
"According to Wikipedia this is still a wash sale: In the USA wash sale rules are codified in ""26 USC § 1091 - Loss from   wash sales of stock or securities."" Under Section 1091, a wash sale occurs when a taxpayer sells or trades   stock or securities at a loss, and within 30 days before or after the   sale:" You add the wash sale loss to your cost basis for the other transaction so you would have two entries in your schedule d reporting 1.) Listing the $2000 loss as a wash 2.) The cost basis for your second transaction is thus $1000+$2000 = $3000 so when it was sold for $2000 you now have a reportable loss of $1000. For more information see here.... http://www.ehow.com/how_5313540_calculate-wash-sale.html "Strangely enough, you have a wash sale, but, for the fact that you sold the shares and then more than 30 days passed, you can take the loss.  I mistakenly used the phrase ""and ended the year with no shared of the stock"" elsewhere, and was corrected, as one can sell at a loss up to 12/31, and have until the end of January to create a wash condition.  In your case, the facts in June combined with you ending the year with no shares removes any doubt, a wash sale, but one that's fully closed out.  Note - while Vicky's answer is correct, it should go on to say that once the stock is not owned for 30 days, the wash sale loss is permitted."
I agree, one should not let the tax tail wag the investing dog.  The only question should be whether he'd buy the stock at today's price. If he wishes to own it long term, he keeps it. To take the loss this year, he'd have to sell soon, and can't buy it back for 30 days. If, for whatever reason, the stock comes back a bit, he's going to buy in higher.  To be clear, the story changes for ETFs or mutual funds. You can buy a fund to replace one you're selling, capture the loss, and easily not run afoul of wash sale rules. Disallowed losses due to the wash sale rule are added to the basis of the repurchased shares.  In your example, on day two you paid $0.70 per share. Then the disallowed $0.30 loss from the previous day gets added to the basis, making your total basis $1.00 per share. When you sell at the end of the day for $1.00 per share, your net gain/loss is zero. Furthermore, you can recapture disallowed losses by selling the last lot of ABC, completely divesting yourself of all holdings in ABC for at least 31 days. Even if that last lot was a loss, when taking into account the increased basis from previously disallowed wash sale losses, you can claim the loss fully on this last, non-wash sale. I was not able to find any authority for the opinion you suggest. Wash sale rules should, IMHO, apply. According to the regulations, you attribute the newly purchased shares to the oldest sold shares for the purposes of the calculation of the disallowed loss and cost basis. (c) Where the amount of stock or securities acquired within the 61-day period is less than the amount of stock or securities sold or   otherwise disposed of, then the particular shares of stock or   securities the loss from the sale or other disposition of which is not   deductible shall be those with which the stock or securities acquired   are matched in accordance with the following rule: The stock or   securities acquired will be matched in accordance with the order of   their acquisition (beginning with the earliest acquisition) with an   equal number of the shares of stock or securities sold or otherwise   disposed of. You can resort to the claim that you have not, in fact, entered into the contract within 30 days, but when you gave the instructions to reinvest dividends. I don't know if such a claim will hold, but to me it sounds reasonable. This is similar to the rules re short sales (in (g) there). In this case, wash sale rules will not apply (unless you instructed to reinvest dividends within the 30 days prior to the sale). But I'd ask a tax professional if such a claim would hold, talk to a EA/CPA licensed in your state. Edited to incorporate the comments elsewhere of @Atkins Assuming, (apparently incorrectly) that duration is time to maturity: First, note that the question does not mention the coupon rate, the size of the regular payments that the bond holder will get each year.  So let's calculate that. Consider the cash flow described.  You pay out 1015 at the start of Year #1, to buy the bond.  At the end of Years #1 to #5, you receive a coupon payment of X.  Also at the end of Year #5, you receive the face value of the bond, 1000.  And you are told that the pay out equals the money received, using a time value of money of 4.69% So, if we use the date of maturity of the bond as our valuation date, we have the equation: Maturity + Future Value of coupons = Future value of Bond Purchase price 1000 + X *( (1 + .0469)^5-1)/0.0469 = 1015 * 1.0469^5 Solving this for X, we obtain 50.33;  the coupon rate is 5.033%.  You will receive 50.33 at the end of each of the five years.   Now, we can take this fixed schedule of payments, and apply the new yield rate to the same formula above;  only now, the unknown is the price paid for the bond, Y. 1000 + 50.33 * ((1 + 0.0487)^5 - 1) / .0487 = Y * 1.0487^5 Solving this equation for Y, we obtain: Y = 1007.08 Ignoring brokerage fees and the wash-sale rule (both of which are hazardous to your health), and since the 15% LTCG tax is only on the gain, the stock would have to drop 15% of the gain in price since you originally purchased it. I'd value your business at about $70k. $20k inventory, $50k in yearly sales.   You have a good margin, but your growth went from 300% in 2016 to almost flat this year. What happened? How are you using the $25k in profit? Wash sale applies. If you purchase shares within 30 days of that Feb 3 sell date, the wash sale kicks in, preventing the loss on that sale, and deferring it into the new shares. Brokerage->Brokerage 13-16 The loss from the previous purchase will be added to the cost basis of the security for the second purchase. Since you sold it at a loss again it would increase your losses. Your loss from the first sale will be disallowed. Your loss will be added to the cost basis of the next purchase. Your gains will be taxed on the total of the cost basis which will reduce your gains. Which you will taxed 'less'. Your gains will be taxed. Your loss is allowed. You will be taxed on both.  Wash Sales really only applies to losses. If you sell for gain, the tax man will be happy to take his share. From my understanding, it does not matter if it is IRA or Brokerage, the wash sale rule affects them all. Check this link: http://www.marketwatch.com/story/understanding-the-wash-sale-rules-2015-03-02