Turbo Tax and wash sale

Forum|Forum|1 year ago
December 19, 2024
2 replies
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I inadvertently made a sale that is considered a wash sale by the IRS. That means I didn't really understand how to avoid such a thing and it had never happened to me before.

Now, does Turbo Tax handle a wash sale properly so that there won't be further surprises? From what I understand, the losses on the sale are disallowed, but the amount that was disallowed will be added to the cost basis of any future sales or, is that correct? Also, will such additional cost be added to any sale regardless of when it happens? Say, I sell stock in 2024! Furthermore, does that additional cost base work on sale of any stock?

I would appreciate feedback on this very much!

TurboTax Home & Biz Windows

Best answer by Bsch4477

The wash-sale rule prohibits selling an investment for a loss and replacing it with the same or a "substantially identical" investment 30 days before or after the sale.
The loss not allowed is added to the cost of the newly purchased asset. Your broker keeps track of that and TurboTax handles the wash sale based on your input from your 1099-B.

Bsch4477Answer

Employee

The wash-sale rule prohibits selling an investment for a loss and replacing it with the same or a "substantially identical" investment 30 days before or after the sale.
The loss not allowed is added to the cost of the newly purchased asset. Your broker keeps track of that and TurboTax handles the wash sale based on your input from your 1099-B.

juham2013Author

I appreciate the feedback.

I know that I can import all the transactions automatically into TT so I assume that the software handles a wash sale properly? Does the additional cost basis add to the sale of ANY stock?

Bsch4477

Employee

The cost basis of the new stock is increased. TurboTax will handle it.

Mike9241

the 1099-B you should receive should properly reflect the wash sale. so enter the data as presented. there will be code W in column f for that line and Turbotax will properly handle the wash sale.

the unallowed loss is added to the tax basis of the securities purchased that created the wash sale. If these

securities are sold at a gain (including taking into account the wash sale loss) that's the end of the wash sale issue for this lot of securities. however, if you purchase more of these securities within 30 days before or after the sale of the original wash sale lot which is sold at a loss during this period, you'll have created another wash sale.

There is an exception to adding the loss to the purchase of the security creating the wash sale if it was purchased in an IRA account. in that case the basis is not adjusted and the unallowed loss just disappears.