I am unclear how to apply wash sale matching rule.?

I made a series of purchases of the same stock over a period of 10 days or so. I also sold an identified lot, less than 30 days after the intital purchase and at a loss, which WAS NOT MY FIRST IN lot. Hence, applying the chronology rule, the first lot I purchased would become the 'replacement' lot under the wash sale rule- it was purchased less than 30 days before the lot I sold at a loss. So how am I supposed to adjust the holding period for this replacement lot? It was purchased PRIOR to the lot I sold at a loss.





Also, if i sell a second, identified lot other than the first in 'replacement' lot less than 30 days after the first lot, is my second lot the 'replacement' lot for this was sale- or can the first lot 'replace' more than one subsequent lot sold at a loss?





All of the examples I have found anywhere on the web, and ALL of the material I have reviewed published by the IRA ASSUME FIFO so their examples do not apply to my situation.





Can you also provide citations?I am unclear how to apply wash sale matching rule.?
Damfino. See a good tax accountant or lawyer. Don't ask IRS. I did and got three different answers.I am unclear how to apply wash sale matching rule.?
You're being thrown off by the identified lot rule. Break it down step by step, each sale in chronological order, and the answer will become clear.





Start with the first sale. Use either FIFO or identified lot basis, whichever applies. Does this result in a gain or a loss? If a gain, there is no wash. If a loss, then the difference gets added to the basis (purchase price) of any stock purchased within 30 days (front or back of the sale) on a FIFO basis.





For each of the other sales, determine again if there was a gain or loss. Go one sale at a time in chronological order. If a sale drops the basis on a previous purchase for which you have already calculated the gain/loss on a sale, then you have to recompute that transaction. This could cause another recomputation too. Just take each transaction one at a time, deal with the fallout that results, and only when you've settled that one, move on to the next sale.





If you do too many wash sales, you might be able to use more complicated (yet easier) things.