http://www.smartmoney.com/tax/capital/index.cfm?story=washrules

＂Your anticipated tax loss is disallowed if, within the period beginning 30 days before the date of the loss sale and ending 30 days after that date, you acquire "substantially identical" stocks or securities. For purposes of this article, let's call them replacement securities.

According to the tax law, your loss transaction and the purchase of the replacement securities are a "wash," so you shouldn't be allowed any tax benefits. Please understand, however, that this righteous concept applies only to losses. If you sell for a gain and buy back identical stocks or securities within the above time frame, Uncle Sam is happy to collect his due with no qualms. (Among us tax professionals, this is known as a "heads I win; tails you lose" rule.)

Options are included in the definition of stocks and securities, so you can also have a wash sale when you unload options at a loss. ＂

具体计算

http://invest-faq.com/cbc/tax-wash-sale.html

“Here's an extended example that may help clarify how the math must be done. The rule is actually rather simple, but when lots of trades are involved it can lead to very complicated situations.

1. 4/01/99 bought 100 at 120.
2. 5/01/99 sold 100 at 110
   The loss was 10 x 100 = $1000.
3. 5/02/99 bought 100 at 95.
   Causes a wash sale of loss on 5/01/99.
4. 5/03/99 sold 100 at 100.
   The gain was 5 x 100 = $500, but you must add the wash sale $1000 into the basis of the purchase on 5/02/99, therefore this turns into a loss of $500.
5. 5/10/99 bought 100 at (any price).
   The sale on 5/03/99 is considered a wash sale even though it became a loss by adding in a wash sale from a previous sale. Stated differently, wash sales can create subsequent wash sales.

The IRS publication goes on explaining all those terms (substantially identical, stock or security, ...). It runs on several pages, too much to type in. You should definitely call IRS for the most updated ones for detail。“

Thank you 一妮 MM.

So in oder to add the disallowed loss ($1000)into the basis of the repurchase stocks, what I need to do is to buy back 100 shaes of XYZ within 30 days of the last sale.

I don't understand why there is a wash sale law since at the end, the tax consequence would be the same.