That's definitely the reason you had wash sales. I waited well past January to trade my stocks again and still had wash sales.
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Wash sale loss disallowed.... skip December?
- Thread starter KCalhoun
- Start date
That's definitely the reason you had wash sales. I waited well past January to trade my stocks again and still had wash sales.
In your trades in 2021, were they of the same quantity or shares?
If your first losing trade was 100 shares but your subsequent trade was only 50 shares, then you would still have 50 shares of disallowed loss in your first trade, which will only be realized until you trade 50 shares of the same stock again.
I think I just realized that the number of trading shares make a difference. In above example, if you don’t trade another 50 shares again the disallowed loss of 50 shares from the first trade will never be realized. That’s probably why the disallowed loss is still there even after 30 days of not trading the same stock.
If your first losing trade was 100 shares but your subsequent trade was only 50 shares, then you would still have 50 shares of disallowed loss in your first trade, which will only be realized until you trade 50 shares of the same stock again.
I think I just realized that the number of trading shares make a difference. In above example, if you don’t trade another 50 shares again the disallowed loss of 50 shares from the first trade will never be realized. That’s probably why the disallowed loss is still there even after 30 days of not trading the same stock.
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I looked at my 2021 trading transactions today. It seems to confirm what I said above.
If you traded 1000 shares of xyz and had a loss. Then, you traded xyz again with 100 shares in the next 30 days. The first 1000 shares xyz trade is considered as a wash sale as a whole. The next 100 shares trade gets cost basis adjusted up from the first trade, but only for 100 shares adjustment.
You still need to trade another 900 shares of xyz in the future to get the cost basis fully adjusted from the original 1000 shares wash sale.
For day trading this wash sale thing goes perpetually as long as you have losing trades, unfortunately. The only way to completely get rid of wash sales is to have enough winning trades to cover all previous losing trades in terms of number of shares traded.
This is my current understanding. It may be wrong. Please feel free to provide your insight.
If you traded 1000 shares of xyz and had a loss. Then, you traded xyz again with 100 shares in the next 30 days. The first 1000 shares xyz trade is considered as a wash sale as a whole. The next 100 shares trade gets cost basis adjusted up from the first trade, but only for 100 shares adjustment.
You still need to trade another 900 shares of xyz in the future to get the cost basis fully adjusted from the original 1000 shares wash sale.
For day trading this wash sale thing goes perpetually as long as you have losing trades, unfortunately. The only way to completely get rid of wash sales is to have enough winning trades to cover all previous losing trades in terms of number of shares traded.
This is my current understanding. It may be wrong. Please feel free to provide your insight.
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.
The wash sale rule does not trip up the people it's intended to trip up, almost as if by accident it tripped up an entire untapped source of free loans to the IRS.
Well, as long as you only have small losses per trade it’s ok. Those disallowed losses will be absorbed (cost basis adjusted up) by later winning trades.
On the other hand, if you have big losses on large shares you will have to trade large shares in the future to get the disallowed losses absorbed completely.
I plan to monitor my transactions every month for wash sales in the future. The brokerage web site lists them in real time.
On the other hand, if you have big losses on large shares you will have to trade large shares in the future to get the disallowed losses absorbed completely.
I plan to monitor my transactions every month for wash sales in the future. The brokerage web site lists them in real time.
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Form 8949 & 1099-B Issues
https://greentradertax.com/trader-tax-center/tax-treatment/cost-basis-reporting/
https://greentradertax.com/trader-tax-center/tax-treatment/cost-basis-reporting/
Found this link talking about wash sales on different number of shares.
https://www.firstrade.com/content/en-us/accounts/taxcenter/?h=washsales
https://www.firstrade.com/content/en-us/accounts/taxcenter/?h=washsales
I looked over my 1099 again and I specifically sold 2 stocks off to eliminate the wash sale disallowed losses, one in particular I did not trade 30 days prior and once I sold it off I didn't trade it for over 2 months. And guess what, I still had disallowed losses on my 1099 on that particular stock. I have no clue how this is possible. I have read many articles and they keep saying that wash sales are not an issue if you close them out and don't trade them for 30 days. I find this absolutely wrong because I have a situation that still shows disallowed losses..
So how does one eliminate wash sale loss disallowed problems????
Okay, I thought I was losing my mind. I've been going crazy for the last 48 hours trying to figure out why my 1099 has this issue. I was very aware of the wash sale rule and carefully closed out any positions with losses and did not trade those (or similar) securities for 30 days. There should be no wash sale losses disallowed as some of these positions were COMPLETELY closed MONTHS before Dec 2021 and never touched again.
This has been maddening b/c all I read is the standard advice which doesn't address this situation we are encountering. In fact the standard advice makes it sound like our situation shouldn't even occur, so I'm left trying to figure out what piece of the puzzle I'm missing or if I'm just dead wrong in my understanding of the rules somehow. No one I've talked to has been able to help.
The only thing I can think of currently is that MAYBE THE BROKERS ARE REPORTING ALL POTENTIAL WASH SALES AS WASH SALES DISALLOWED AND MAY NOT BE CORRECTLY ADJUSTING THE COST BASIS FOR TRADES WHEN THEY ARE FULLY CLOSED OUT. I don't know how to address this. I also don't how how to check this other than going through each transaction individually. There are thousands and thousands of transactions reported so this is extremely tedious. My accountant told me verbatim that she has to report the numbers on the 1099 or the IRS will be on me quickly. I'm at a loss at this point and I think I need to find a professional who has experience in this, specfically wrt to long/short options and wash sales.
Hey man, wish I knew.Okay, I thought I was losing my mind. I've been going crazy for the last 48 hours trying to figure out why my 1099 has this issue. I was very aware of the wash sale rule and carefully closed out any positions with losses and did not trade those (or similar) securities for 30 days. There should be no wash sale losses disallowed as some of these positions were COMPLETELY closed MONTHS before Dec 2021 and never touched again.
This has been maddening b/c all I read is the standard advice which doesn't address this situation we are encountering. In fact the standard advice makes it sound like our situation shouldn't even occur, so I'm left trying to figure out what piece of the puzzle I'm missing or if I'm just dead wrong in my understanding of the rules somehow. No one I've talked to has been able to help.
The only thing I can think of currently is that MAYBE THE BROKERS ARE REPORTING ALL POTENTIAL WASH SALES AS WASH SALES DISALLOWED AND MAY NOT BE CORRECTLY ADJUSTING THE COST BASIS FOR TRADES WHEN THEY ARE FULLY CLOSED OUT. I don't know how to address this. I also don't how how to check this other than going through each transaction individually. There are thousands and thousands of transactions reported so this is extremely tedious. My accountant told me verbatim that she has to report the numbers on the 1099 or the IRS will be on me quickly. I'm at a loss at this point and I think I need to find a professional who has experience in this, specfically wrt to long/short options and wash sales.
An open question for anybody:
In a reducto ad absurdum scenario just to clarify the border zone,
If a trader opened an account on March 8 of the tax year
traded the products you are trading
exited each and every trade. Out. Done.
then closed out the accound on October 20 of the tax year.
Is there any scenario under which the situation you face could occur to that trader?