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Old 03-17-2012, 03:22 PM
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Reporting Disallowed Wash Sale Losses

Hi,

I have 13 Wash sales that have losses. THese trades happened within days of each other. They are identical securities. My consolidated 1099 from Ameritrade calculates a "Disallowed Wash Sale Loss" (Line 5). I am confused by how to report these. Is the entire $4,500 loss calculated by Ameritrade disallowed? I read on the IRS site that the loss of one sale gets added to the basis of the other sale, and the acquisition date changes. Do I need to roll forward all of these or do I just enter the calculated loss from Ameritrade on Sched D? If all of the securities were sold Dec 29th does this change the wash sale?
Thanks!



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Old 03-20-2012, 05:14 AM
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I am confused by how to report these. Is the entire $4,500 loss calculated by Ameritrade disallowed?---->Nondeductible loss in a wash sale transaction is reported on 1099B line 5. You cannot deduct losses from wash sales unless the loss was incurred in the ordinary course of your business as a dealer in stock or securities. However, you cannot deduct a loss from a wash sale even if it is not reported on Form 1099-B.You need to report a wash sale transaction on line 1 or line 3 of Form 8949 with the appropriate box checked and need to complete all columns. Enter "W" in column (b). You neeed to enter as a positive number in column (g) the amount of the loss not allowed. You should see the instructions for Form 8949, columns (b) and (g), later.
http://www.irs.gov/pub/irs-pdf/f8949.pdf
I read on the IRS site that the loss of one sale gets added to the basis of the other sale, and the acquisition date changes.--->Correct. Although the loss can't be claimed on a wash sale, the disallowed amount is added to the cost of the repurchased stock. if you repurchase fewer shares than you originally sold for a loss, then all of the loss is not disallowed. Only the portion of the loss attributable to the "washed" shares will be disallowed. If you only buy back a portion of the stock sold, then only that portion of the loss is disallowed.
Do I need to roll forward all of these or do I just enter the calculated loss from Ameritrade on Sched D? If all of the securities were sold Dec 29th does this change the wash sale?----> the loss cannot be immediately claimed for tax purposes. So, the loss can be claimed when it is finally disposed of, other than in a wash sale. the wash sale rules really only apply when the transactions bridge two tax years. You can trade all you want throughout the year, but if you close out your position prior to the end of the tax year and stay out for the required period of time, the wash sale issues are really not important. But, if you hold on to just one little share into the new tax year, you can look forward to making a bunch of wash sale computations. While the wash sale provisions work on shares that you sell for a loss, there are no corresponding provisions for stock that you sell at a gain and then immediately repurchase. So, while wash sale losses can't be claimed, gains can't be avoided. That is, if you sell stock for a gain and buy it right back, you must still report the entire gain .no special gain deferral rule applies.



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