Considerations
This is an important tactic to remember in a volatile market. Investors often keep securities that they believe will perform well long-term, but are currently giving them a short-term loss. By doubling up on your position in that security at the current and lower cost, and waiting more than 30 days to sell the original lot, you can lower your cost basis without incurring a wash sale. For example, let's say you bought 100 shares of Amazon at $60. It's now trading in the $20's. You may think it's a good long-term investment, but at $25 you are showing an unrealized loss. You could sell this lot and take the loss, but you'd have to wait 30 days to buy it back in order to avoid a wash sale. In those 30 days, Amazon's market price may rise and you may miss the appreciation. So, instead of selling, buy another 100 shares at $25. Then, after 30 days, sell your first lot and realize the loss, therefore lowering your tax liability. Now your Amazon stock is at a much lower cost basis.
Note: To utilize this strategy you must purchase the second lot by November 28, so you can wait out the 30-day wash sale period and sell the original lot on the last trading day of the year.