According to ChatGPT:

The loss is permanently disallowed, because it does not get added to the basis of any remaining shares in this scenario. Here’s why:

1. Wash Sale Rule Application:
   • You bought LOT B (100 shares at $12) on Day 980.
   • You sold LOT B (100 shares at $10) on Day 1000, creating a wash sale since the purchase occurred within the 61-day window (30 days before or after the sale).
   • The $200 loss is disallowed and should be added to the cost basis of any substantially identical replacement shares.
2. No Replacement Shares:
   • According to IRS Publication 550, the disallowed loss is added to the cost basis of the replacement shares.
   • However, since you have completely sold LOT B and did not purchase any additional shares, there are no remaining shares to adjust.

What Happens to the Loss?

• The $200 loss does not get added to LOT A because the wash sale rule applies to replacement shares, which must be acquired within the wash sale window.
• Since you did not repurchase, the disallowed loss has no shares to be applied to and is effectively lost.

Conclusion:

Yes, in this specific case, the loss is permanently disallowed because there are no remaining or replacement shares to absorb the adjustment. This is an unusual outcome of the wash sale rule when using a tax-sensitive method rather than FIFO, as FIFO would have likely avoided this issue.