Wash sale loss disallowed.... skip December?

[KCalhoun]

Personally if I have questions like this I call the broker's tax department and ask detailed questions, which they will answer, regarding exactly how and why specific transactions are reported the way they are.

 

[S2007S]

Personally if I have questions like this I call the broker's tax department and ask detailed questions, which they will answer, regarding exactly how and why specific transactions are reported the way they are.

True and I have, but about 99.999% of the time they work around the questions you have saying that the questions I have should be brought up to a tax professional as they are NOT allowed to give any kind of tax advice or tax answers.

 

[S2007S]

As you can see how complex wash sales are you would think they would tweak them, there are literally thousands of posts online talking about wash sales and most of the ones who know exactly how they work always say that wash sales are no threat at all as long as you close the position out prior to the new year. I can post some of them here. They sound like they are a walk in the park on a spring sunny day. Just sell them and watch the disallowed losses get swept far away like they never happened

 

[ph1l]

Your first part I do not understand. How could I have sold the shares now, if I had already sold them in December 2021???

I guess I thought you bought back the shares and currently own them.

An explanation of how this can happen could be something like
https://ttlc.intuit.com/community/i...-sale-losses/01/1386111/highlight/true#M48444

let me see if I can create an example as I suspect Vanguard is doing it correctly but there is a misunderstanding on how this settled out:

• I buy 10 shares of ABC company for $100 on Oct 1. My cost basis is $1000
• I sell those same 10 shares of ABC Company for $50 on Nov 28. My tax loss is $500
• However, I turn around and buy 10 shares of ABC Company at $70 on Nov 30. My cost basis is $700. That creates a wash sale! So the $500 loss I created on Nov 28 is negated and my adjusted cost basis on this new lot is adjusted upwards by the $500 to $1200.
• On Dec 2, I sell the 10 shares I own in ABC Company for $75 per share. Since my adjusted cost basis is $1200 and my proceeds are $750, my tax loss is $450.
• I do not buy any more shares of this company.

let's summarize:



two purchases: $1000 for the first purchase and $700 for the 2nd purchase

two sales: $500 in proceeds for the 1st sale and $750 for the 2nd sale

$1000+ $700 - $500 - $750 = $450 loss..... which is the same tax loss I noted above!



I suspect Vanguard reported it correctly (they are too big to have millions of people complain!)

 

[S2007S]

I guess I thought you bought back the shares and currently own them.

An explanation of how this can happen could be something like
https://ttlc.intuit.com/community/i...-sale-losses/01/1386111/highlight/true#M48444

Yes I DID buy back the shares in February 2022 and have traded the stock numerous times so far.

 

[S2007S]

Oh here yaaaaaaaa go. Took all of 23 seconds to find this glorious reddit forum all about wash sales


And check out the title....that title saysssssss it ALLLLLLLL

https://www.reddit.com/r/path%3D%252Fr%252FOptionswheel%252Fcomments%252Fotbv84%252F

 

[S2007S]

From the forums


As long as you fully exit the position before the end of the year then it won't matter in the end. Wash sale rules don't completely prevent realizing losses, they just postpone the realization of those losses to a later date. If you close your positions out some time later, the loss will be realized then. If that is still within the same calendar year, then it's all added up together.

The only way you get in trouble is by trying to realize a loss in December then buying back in in January, thus moving a loss from one tax year to another. If you close out in November and then refrain from touching that stock through the end of the year then you'll be fine.

Obligatory cranky note: wash sale rules are among the many reasons that actively trading stocks, especially a single stock, can be a terrible idea. Quit playing and stick to boring stuff.

 

[S2007S]

And another one


If the trader exits wash sale holdings by year end, the wash sales are a big nothing, and do not affect your losses recognized for the current tax year.



The best time to exit a wash sale holding entirely is by NOVEMBER,
and to STAY OUT OF the tickers all of DECEMBER.
(This December non-activity in the same tickers
prevents you from reviving the wash sale in January by accident)



Otherwise, if you hold through the end of the year,
the wash sale loss is carried into the following tax year,
via the revised wash-sale basis of the "new" stock holding, and
the tax loss is recognized only upon closing out the wash sale stock,

 

[Jzwu2017]

I just started a new thread about wash sale disallowed losses in day trading. Since I closed out all my positions before the end of 2021, why are there still disallowed losses in my 1099-B?

 

[s trader]

I had the same issue with the concept of wash sales, but i found the stock costs are not correct without the wash sale adjustment. So if you need to check your true gain/loss go thru every transactions as when you did them, not using the cost basis on 1099-B.