Two questions about Wash sale rule

Hi all,

I am always confused by the statement of the Wash sale rule. I have two questions, please help out:

  • Suppose I had purchased 100 shares of XYZ at different points, and I sold them at net profit of $1000 (total gain = $10000 and total loss = $9000). Does this mean if I buy XYZ again within the next month, I will trigger wash sale rule coz some of my previous 100 shares were sold at a loss (albeit overall it was a profit).
  • If wash sale rule gets triggered, does it mean that the loss from previous trade gets added as cost basis to the next trade (short or long)? If that is the case, why does this rule even exist? How does it work if my next trade is a smaller short (say shorting 1 share of XYZ)?


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