You buy security X for $1000 and sell it for $100. You immediately repurchase security X for $100 and sell it for $1100.
You made a net profit of $100 but are taxed on $1000 because you can't write off the $900 loss.
You made a net profit of $100 but are taxed on $1000 because you can't write off the $900 loss.
The nasty case is if you buy X at $100, sell at $1000, buy at $1000, wash sell at $100, then buy at $100.
You have $900 in gains according to the wash sale rule but no actual gains. Your basis in X is $1000, so you would have no gain if you sold at the current price, but if you hold it until the end of the tax year, then you owe taxes on $900 despite not making anything.
I imagine a situation where you sell everything of Stock A on Dec 20 realizing all losses, and then mistakenly rebuy back on Jan 10. Now all your loss for previous year is disallowed and you have no way to fix it? Even if you immediately sell the loss would count for the current tax year, and not previous tax year, right?