If I own some stock, then buy more and then sell, is that a wash sale?

Question

I use Robinhood for stock trading that uses FIFO (there is no other selectable option).

If I..

Bought 10 shares of SSS 1/1/2019 at 1:00 pm at $100 each = $1000
Bought 10 shares of SSS 9/1/2019 at 2:00 pm at  $50 each = $500 
Sold   10 shares of SSS 9/1/2019 at 2:02 pm at  $50 each = $500

According to wash sale, what is my cost basis for year 2020 - $50 each ($500 total)? and I can claim the $500 loss in 2019 assuming no more transactions for stock SSS?

If #2 and #3 were flipped, I know that would be a clear case of wash sale. I am confused because #2 and #3 happened the same day and #3 (selling) a few minutes after #2 (buying).

daytrader · Answer

I'd say that almost definitely counts as a wash sale.

If you could simply reverse steps 2 and 3, The Wash Sale Rule wouldn't be effective because everyone could game it easily. The goal is to prevent investors from taking losses solely for tax purposes, and while that may not be your intent, the outcome is the same.

Clear Wash Sale: Buy 100 shares, Sell 100 Shares, Rebuy 100 Shares = Position of 100 Shares and a Realized Loss

Your Example: Buy 100 Shares, Buy 100 Shares, Sell Original 100 Shares = Position of 100 Shares and a Realized Loss

The reason I say "almost definitely" instead of "definitely," is because I've noticed some ambiguity/subjectiveness to the rule from my own experience.

For example, the rule doesn't allow the repurchase of similar securities I traded both UVXY and SVXY in the same period and it was marked as a wash sale even though these are inverse ETFs. That said, defining similar stocks is clearly more subjective than analyzing buy/sell orders.

If I own some stock, then buy more and then sell, is that a wash sale?

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