How to calculate wash sales using LIFO?

N

nillionaire

Last year I did a ton of daytrading of stocks/ETNs (the CSV file from my broker has somewhere around 3000 lines in it). This included a lot of trading of the same symbols in December and January of this year, which means there are a lot of wash sales.

I would like to use TradeLog to calculate the wash sales. But the problem is that my broker lets you change the tax lot identification method, and early last year I had changed it from FIFO to LIFO. TradeLog only uses the FIFO method, it does not support LIFO.

I have already talked to a highly respected CPA firm that specializes in trading issues about this. They said that since TradeLog only supports FIFO, they cannot help me.

Any suggestions on what I should do?
 
My first suggestion would be to double check to see what kind of tax reporting your broker provides you. Is it possible they are already doing these calculations for you?

My second suggestion would be to really familiarize yourself with the wash sale rules and see if you can manually calculate your tax liability. I.e., if you ever have gains that wipe out previous wash sales, you can essentially ignore wash sales up to that point. I don't envy you if you go this route as it is a major league pain in the butt.

My third suggestion is to write a computer program to calculate the tax liability yourself given the wash sale rules. Maybe just make it read in one symbol and that symbol's trades to simplify it.

My fourth suggestion is to ask a friend to write this computer program if you don't know how to do it.

My fifth suggestion is to trade different symbols in December than you do from January through November so that you don't run into this issue in the future.

Good luck, sounds crappy.
 
I'll play along.

Oh wait..
Tradelog supports editing transactions, including SPECIFIC LOT MATCHING! So the fact Tradelog doesn't (directly, automagically) support LIFO, doesn't mean it can't be used. Now with that clarified, I'm certain the CPA firm you contacted would be happy to charge per hour fees to manually adjust your trades in TradeLog (or externally), which is not the same as saying they cannot help. Unless of course, they are too busy at this moment to deal with your inadequacies for an April 15 filing. In that case, the CPA firm would likely suggest and offer to file an extension. Again, not the same as saying they can not help. IF your scenario is as you've described, it's very very unlikely a CPA firm would not be interested in your business. I think your post has some other agenda, but your post is really just a faux pas.


Trade On!
 
Quote from tiddlywinks:

I'll play along.

Oh wait..
Tradelog supports editing transactions, including SPECIFIC LOT MATCHING! So the fact Tradelog doesn't (directly, automagically) support LIFO, doesn't mean it can't be used. Now with that clarified, I'm certain the CPA firm you contacted would be happy to charge per hour fees to manually adjust your trades in TradeLog (or externally), which is not the same as saying they cannot help. Unless of course, they are too busy at this moment to deal with your inadequacies for an April 15 filing. In that case, the CPA firm would likely suggest and offer to file an extension. Again, not the same as saying they can not help. IF your scenario is as you've described, it's very very unlikely a CPA firm would not be interested in your business. I think your post has some other agenda, but your post is really just a faux pas.
More...

You are right that TradeLog says it can be done manually. But I talked to the TradeLog expert at this CPA firm and they said given my high number of trades and the fact that they'd have to check timestamps for all my trades on my broker's web site in order to do it manually, it would just take way too long. This person also said that even if they did all the LIFO matching, TradeLog may still calculate the wash sales using FIFO. That's what they said, and they are a TradeLog expert. I assure you I am not lying about this.

I will have to see if there's another trading CPA firm that can handle this.
 
Quote from sprstpd:

My first suggestion would be to double check to see what kind of tax reporting your broker provides you. Is it possible they are already doing these calculations for you?
More...

My broker actually sent wash sale calculations along with the Form 1099. But there are a couple problems with it:

1) From what I've read, short sales closed for a loss are governed by the settlement date, and short sales closed for a gain are governed by the trade date. But my broker did not include ANY of my short sales from 12/27 thru 12/31, because they said ALL short sales are governed by the settlement date.

2) In November, I made one daytrade of HPQ, where I went long and then sold for a loss. I NEVER touched HPQ any other time in the year. But my broker's document says that trade generated a wash sale disallowed. I asked them about it and they insisted it is correct - they said it had to do with the fact that my market orders to buy and sell had multiple fills. But then I plugged that trade (including all the fills individually) into TradeLog, and it says there is no wash sale for that trade. Unless it has to do with the fact that I'm using LIFO, but I doubt it.

So based on those things, I don't think I can rely on my broker's wash sale information.
 
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