As wash sales are generated, the amount of disallowed loss transferred to an open lot is tracked and recorded as the current cost fields are updated. For example, suppose a lot holding has a current cost of $10000.00 with $500.00 contributed by a wash sale adjustment and that half of the holding is closed. The lot cost is reduced by $5000.00 and the wash disallowance is reduced by $250.00. The disallowed loss reduction is reported and the remaining disallowed loss remains available on the open holdings.
As the lot decrements, due to subsequent sale or close transactions, the amount of remaining disallowed loss is proportionately reduced.
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