### Comment:
This implies elmo sold at the end of tax-period and rebought after, and somehow sold again for (probably even worse) loss. Unless Elmo actually made money. 
  
 So if the wash-sales are adjusted in for next tax-period, wouldn't Elmo still losing money mean that he still needs not to pay taxes?

### REPLY:
You can only offset gains with losses. If you have 100k in realized gains and can't deduct losses because you rebought another stock, you have to pay taxes on the $100k gained.

### END.