When the wash sale rules apply, the realized loss is:
A) recognized at time of sale and added to basis of the newly acquired stock.
B) not recognized at time of sale and added to basis of the newly acquired stock.
C) not recognized at time of sale and does not affect basis of newly acquired stock.
D) recognized at time of sale.
E) not recognized at time of sale and subtracted from the basis of the newly acquired stock.

Question

Quizplus · Accepted Answer

When the wash sale rules apply, the realized loss is not recognized at the time of sale and is added to the basis of the newly acquired stock. This means that the loss can still be used to offset future gains, but the investor must wait until they sell the newly acquired stock to realize the loss.

When the Wash Sale Rules Apply, the Realized Loss Is