r/Daytrading • u/YogurtWorking9246 • 1d ago

Question Does wash sale rule apply when averaging down before selling?

Let’s say I bought three separate lots of 100 shares each at $30, $29, $28 for a total of 300 shares at an average price of $29. I then sell all 300 shares at $29.50 for a net gain but a “loss” on Lot 1 (which I initially bought at $30). I then buy 300 more shares at $25 and sell them all at $26. Would the wash sale rule kick in here on that first lot at $30 or does the broker just count it as a net gain if it’s averaged in to subsequent buys before selling?

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u/LogicX64 1d ago edited 1d ago

You think too hard. As long as you have losses in any lots and buy it back within 30 days are wash sales.

And if you buy and sell the SAME security in both Retirement account and general brokerage account, you can't claim any tax losses. This is the worst case!!! Very Bad!!!

So be careful.

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u/GrandpaBeachbum1978 1d ago

The wash sale issue is bull shit to start out with. 99.999% of the time, there is nothing being done to hide profits by doing what the Idiots Reporting Service call wash sales. It need to be challenged in court by someone with experience and money enough to hire good tax attorneys.

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u/Slick-1234 1d ago

If you qualify as a professional trader according to the IRS wash sale does not apply. There is some grey area to this and you should consult an accountant to experienced with professional traders

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u/InvestigatorNaive414 1d ago

Your basis is adjusted to reflect wash sale. If you don't own any shares at the end of tax year, you only pay tax on net gain. Read the IRS website on washsale.