How to Calculate a Wash Sale
- 1). Calculate loss. When stock is sold at a loss, the amount of the loss is the cost of the stock less the proceeds of the sale. If only a portion of the stock is sold, then the corresponding proportion of the initial cost is used. For example, if 100 shares were purchased at $2 each and 50 shares were subsequently sold for $1, the loss is $50 (50x2 - 50x1 = 50).
- 2). Identify 30-day window. The 30-day applicability of the wash rule applies both prior to and subsequent of a sale. So, if the shares in the example given in the previous step were sold less than 30 days from the date of original purchase, the $50 could not be deducted because it would count as the disallowed loss of a wash sale. If the 100-share position was acquired through multiple purchases, only some of which occurred within the 30-day window, then only the loss on those shares purchased in the window would classify as a disallowed loss.
- 3). Identify losses applied to new purchases. If shares of the same company are purchased within 30-days after the sale, the loss becomes a wash to the extent of the new purchase. Using the same example, if a new 50 shares are purchased within 30 days, then the entire loss on the 50 share sale is a wash. If only 10 new shares are purchased, then only the loss on 10 shares is a wash, and the loss on the remaining 40 is deductible.
- 4). Add wash proceeds to cost basis. Whenever a wash sale occurs according to the 30-day rule, the amount of the loss is applied to the cost basis of the remaining shares. Assuming that the entire $50 loss in the initial example is a wash sale, the remaining 50 shares, which were originally purchased at $2, would now have a total cost basis of $150 (2x50 + 50).
Source...