Wash sale rule is very unfair IMO
First off, almost no one you ask(even the brokers at TD Ameritrade) knows how the rule works, but I fault myself for not knowing. Basically the IRS says that if you have a gain on a stock, you can sell it whenever you want and realize the gain for tax purposes the same year you sell. However if you lose on a stock, you have to look back 30 days before you sold & 30 days after you sold, and make sure you didn't buy even 1 share of that same stock during that 60 day period. If you did, the sale is considered a wash sale, and you can't realize the loss associated until you do wait at least 60 days in total. In this case, a wash sale adjustment is made to add the loss associated with that stock to the cost basis of the remaining shares you own, so you can eventually take the loss.
The hugely unfair part, is because of this rule, you may not be able to realize a loss on a stock in a given year, even though all gains are realized(and taxed) the year you sell. No one ever seems to explain it right either. Even when you look it up on Google, it's not easy to understand, and is rarely explained so you can understand.
The problem is, all those explaining it, don't emphasize that you need to hold a stock with an associated loss, for 30 days, without purchasing even 1 additional share. Then once you hold it for 30 days or longer, you can sell it and take the loss, as long as you don't buy back even 1 share of that same stock back for 30 days or longer. Not sure also why the rule states a total of 61 days instead of 60 days
