When a loss is disallowed under the wash sale rules,
A)The loss is lost forever.
B)The loss is carried over indefinitely.
C)The loss is added to the basis of the newly acquired stock.
D)None of these.

Question

Quizplus · Accepted Answer

When a loss is disallowed under the wash sale rules, the disallowed loss is added to the basis of the newly acquired stock. This adjusted basis will be used to calculate the gain or loss when the investor sells the newly acquired stock. Therefore, the disallowed loss is not lost forever but is instead factored into the future tax calculations for the new stock.

When a Loss Is Disallowed Under the Wash Sale Rules