Deferred Wash Sales Lost when switching to MTM?

[jtrader33]

Every example that I've seen of making the Section 481 adjustment for change of accounting method to MTM shows a cost basis to market value adjustment for positions open at year end. However, what about the following scenario:

12/28/2012: Buy 1000 shares XYZ at 10.00
12/29/2012: Sell 1000 shares XYZ at 5.00
1/15/2013: Buy 1000 shares XYZ at 5.00

There was a -$5000 loss in 2012 that was deferred to 2013, but with no open position at year end is this deferred loss forfeited?

 

[zdreg]

bump

 

[Occam]

Every example that I've seen of making the Section 481 adjustment for change of accounting method to MTM shows a cost basis to market value adjustment for positions open at year end. However, what about the following scenario:

12/28/2012: Buy 1000 shares XYZ at 10.00
12/29/2012: Sell 1000 shares XYZ at 5.00
1/15/2013: Buy 1000 shares XYZ at 5.00

There was a -$5000 loss in 2012 that was deferred to 2013, but with no open position at year end is this deferred loss forfeited?

As the cost basis of the 1/15/2015 shares is now $10 (and the date of the 1/15/2013 shares is now 1/28/2012, at least from the perspective of holding period) due to the wash sale rule, I think that this should show up on the 481, adjusted to 12/31/2012 prices, even if it bears the 1/15/2013 date on the 481 form itself. There is a column of the 481 form entitled "Reason" where you can explain such cases.

But don't take my word for it as I am not an accountant or tax lawyer. If it's an important question to you, then I'd suggest getting a consultation with GreenTraderTax or a similarly qualified professional.