thanks Tom , excellent examples - and thanks to everyone else for their time, patience, and input -
I've come up with another example and explanation just to see if I'm understanding things correctly - please give me your feedback :
At t=0 I buy 100 shares of mutual fund A for $5,000 ( $50/share) At t` days I buy 100 shares of A for $1000 ( $10/share) At tp days I sell all 200 shares of A for $5000 ($25/share)
Total Loss = $1000 ,(i.e. $6000 - $5000)
Now , looking at it another way and incorporating the wash sale rules :
the first 100 shares are bought at $5000 & sold at $2500 for a $2500 disallowed loss due to the wash sale invoked by the 2nd 100 shares bought.
however, the cost basis of the 2nd 100 shares bought at $1000 increases to $3500 and then these shares are sold for $2500 as part of the fund closeout.
and we get the same $1000 Loss ( i.e. $3500 - $2500) as shown above & this can now be entered on Schedule D.