How does the wash sales rule work on stock dividends?

I'm doing my taxes for 2008 and found this part really confusing.


I bought a stock in 2007 (in two separate transactions) and reinvest my dividends. I sold them all in December 2008 to realize a loss for tax purpose. Now the last dividend was reinvested within a month before I sold the stock. I supposed that's what triggered the wash sale rule. Here's the basis for all my transactions from Fidelity:





(shares / date acquired / date sold / proceeds / basis / gain or loss)





Long term


45 10/15/2007 12/3/2008 323.03 2089.95 -1766.92


Wash Sale 0 -23.95 23.95


0.61 10/15/2007w 12/8/2008 4.44 27.04 -22.6


55 11/5/2007 12/3/2008 394.82 2002.7 -1607.88


0.71 11/21/2007 12/3/2008 5.1 24.3 -19.2





Short term


2.719 11/26/2008 12/3/2008 19.52 13.75 5.77


1.253 2/22/2008 12/3/2008 8.99 32.23 -23.24


1.435 5/23/2008 12/3/2008 10.3 32.63 -22.33


1.883 8/22/2008 12/3/2008 13.52 33.09 -19.57





The questionable items are the second and third items under long-term. The rest are fine. So the questions are:





1. Where does the 0.61 shares (item 3 under long term) came from? I didn't buy that. I suppose it is related to the wash sales but the basis and the share count don't look like an exact match from other transactions.


2. Where did the wash sales (23.95) amount came from?


3. The last dividend was sold as a gain. Why did it trigger the wash sales calculation? I thought wash sales rule applies to loss only.


4. If I have all my shares of this stock closed out, shouldn't the wash sales rule cause no difference in my total gain/loss? The two items added by the wash sales rule calculation do not even out.





Thanks a lot!How does the wash sales rule work on stock dividends?
The reinvested dividends trigger the wash sale rules. If the money bought .61 shares, you cannot deduct the loss on .61 shares.





The loss is deferred by adding it to the cost basis of the new shares--so when these are sold, they loss is taken then.





I do not have the time to put these in first in/first out order.





To see if you have the total gain/loss correct, do your own math separate from these imported values and see if you have the correct gain/loss. There is a chance that the wash sale wasn't added to the cost basis of the replacement stock.