The loss on sale (subject to wash sale rules) is added to your cost basis of the subsequent purchase that will trigger the rule into play. It’s
to prevent manipulation for offsetting gains in a given year, resulting in a decrease of tax liability. You will recognize the loss on your wash sale when you sell stock without repurchasing in a 30 day window.
Blinds3290 t1_jedh03h wrote
Reply to Can someone help me understand my taxes as an unprofitable day trader? by maidog6
The loss on sale (subject to wash sale rules) is added to your cost basis of the subsequent purchase that will trigger the rule into play. It’s to prevent manipulation for offsetting gains in a given year, resulting in a decrease of tax liability. You will recognize the loss on your wash sale when you sell stock without repurchasing in a 30 day window.