Can a wash sale chain again against the original lot?
Let's say I have two transactions.
|Qty|Date Acquired|Date Sold|Proceeds|Cost Basis|Gain/Loss| |:-|:-|:-|:-|:-|:-| |10|3/1/2023|5/8/2023|$1,000|$2,000|\-$1,000| |100|5/15/2023|5/17/2023|$10,000|$9,000|$1,000|
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I'm trying to process the wash sale here, since the sell on 5/8 was a loss, and there was an acquisition on 5/15, that should trigger a wash sale. So, I split the lot of 100 into one of 10 and one of 90. So far so good.
|Qty|Date Acquired|Date Sold|Proceeds|Cost Basis|Gain/Loss| |:-|:-|:-|:-|:-|:-| |10|3/1/2023|5/8/2023|$1,000|$2,000|\-$1,000| |10|5/15/2023|5/17/2023|$1,000|$900|$100| |90|5/15/2023|5/17/2023|$9,000|$8,100|$900|
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Now, I need to offset the loss with the new lot that I split out, so it would turn into this:
|Qty|Date Acquired|Date Sold|Proceeds|Cost Basis|Gain/Loss| |:-|:-|:-|:-|:-|:-| |10|3/1/2023|5/8/2023|$1,000|$1,000|$0| |10|3/8/2023|5/17/2023|$1,000|$1,900|\-$900| |90|5/15/2023|5/17/2023|$9,000|$8,100|$900|
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Here is my question. Do I get to stop here? If I understand wash sales correctly, I don't think I can. The lot of 10 that is sold on 5/17 has a loss now, and there are other shares (the 90) that were acquired within 30 days. Does it matter if these were originally the same lot? I feel like it would keep chaining. If not, what is the difference between this and if I just bought 100 shares of something, after the price drops in a couple of days, I sell 10 of them for a loss, then try to claim that loss? I feel like in that scenario, I'd have to create a wash sale against the original lot.
In the end, this just feels wrong. Ultimately I sold everything, and I'm going to end up creating a bunch of rows on my 8949 for just two simple transactions. Is there a more appropriate way to handle this?
I should also say, that in reality I have more than 2 transactions. This is just a scenario that I run into as I'm trying to process everything. Also, some of my transactions are covered (ESPP) and some are non-covered (RSU). So, I have to report adjustments on all of these, some with Box A checked, and some with Box B checked. I'm not sure if that makes a difference, but I just wanted to make sure that detail was in there.