As I read it in IRS Publication 550 regarding wash sales and cost basis calculations that: If I buy 100 shares of stock (or an SSF for that matter) at $100 a share ($10,000) Sell is at a loss at $90 a share ($9,000) and then, Buy 100 shares back less than 31 days later at $95 dollars ($9,500) - 1. I cannot take the original loss - as this is a wash sale. 2. *However*, I can apply the disallowed $1,000 loss to the cost basis of the next purchase of the same stock and amount, (cost basis is now $10,500)- which has a nice affect on the overall taxable amount on a subsequent profitable sale. Later I sell the stock at $11,000 total sale and hence the taxable amount is $500, not $1,500. Do I have this correct? This is taken from page 56 of IRS publication 550. Example 1. Note - this is a mainly a concern for those of us who are not full time traders and hence have not elected MTM.