I bought 1000sh of spy and sold it on 11/30/2013 with a loss $800. And I did the same thing on 12/15/2013 with a gain $500. Then i did not trade spy until 1/5/2014. should the $800 loss on 11/30/2013 still be considered wash sale disallowed for 2013 tax year? As far as I know, the wash sale should settle after 31 days. The trade was more than 31 days ago. Can anyone clarify it? Thanks a lot.
I am not a tax professional, so do your own due diligence regardless of what I say. I am assuming each trade was 1000 shares (if not, then things change). You have a loss of $800 on 11/30/2013 on 1000 shares (buy and sell). You have a gain of $500 on 12/15/2013 on 1000 shares (buy and sell). Because you had a loss on 11/30/2013 and you traded within 30 days on 12/15/2013, you do not recognize the loss on 11/30/2013, but instead transfer the loss into the cost basis of 12/15/2013 (i.e., increase the cost basis). Therefore, you don't have a loss on 11/30/2013, but instead you have a loss on 12/15/2013 of $300 ($500-$800). However, you trade again on 1/5/2014, which is within 30 days of the 12/15/2013 loss, so you cannot take the $300 loss on 12/15/2013. That $300 loss is transferred into the cost basis of your trade on 1/5/2014. So if you made $X dollars on 1/5/2014, your reported gain or loss would be $X-$300 and you would not be able to recognize the $300 loss on your 2013 taxes. You can imagine that if you trade the same symbol repeatedly with different share counts that tracking all this information can quickly turn into a nightmare scenario. Good luck!
Luckily now your broker does the counting! What bothers me that under some scenarios you might never get to claim your loss unless you are for 31 days out of the market.