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Form 8949 modifying cost bases

Forum|Forum|6 years ago
September 13, 2019
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I have unknowingly made very few wash sales across taxable and retirement accounts. I have prepared TY 2018 tax return using TT Premier 2018 and used the broker issued 1099-B for this. Now I have to incorporate modifications to cost bases for a few transactions which were wash sales across IRA and taxable accounts.

Can I open my form 8949 in Turbotax and modify the required bases? Or do I need to do something else? Please post a link to any article that explains the process.

Thanks

Nvempaty

Not A Product Question

Best answer by TomYoung

"Can I open my form 8949 in Turbotax and modify the required bases? Or do I need to do something else? Please post a link to any article that explains the process."

To answer your actual question: Yes, you can do that in "forms mode" if you are using a desktop product. To get the "correct" presentation here you'd enter your adjustment in column (g) and enter a "W" in column (f). This might prevent e-filing if you are forced to "override" amounts and codes that are already there, but should not pose a problem if you're simply filling in blank fields.

If you're using an online product then the forms aren't available to you for direct entry but you can accomplish what you're trying to do using "interview mode." Go back to the sale where you want to make the wash sale adjustment and edit the sale. Click on the "I'll enter additional info on my own" blue button and on the next page enter your adjustment in the "Wash sale loss disallowed" box. That will correctly report the trade on Form 8949.

VolvoGirl

Employee

One thing I know is IRA and retirement accounts don't figure into wash sales. You do not report any buys, sells, interest, dividends or any transactions in IRA or 401K accounts. So you can move money around inside them. That's the benefit of using IRA accounts. You only report distributions as ordinary income for which you will get a 1099R. Which means you will lose the capital gains lower tax on any sales.

A

Anonymous

ira's can figure into wash sales.

A wash sale occurs when you sell or trade stock or securities at a loss and within 30 days before or after the sale you…. 4.) Acquire substantially identical stock for your individual retirement account (IRA) or Roth IRA."

For many years the rules were not as clear when it came to IRAs, but that changed with Revenue Ruling 2008-5. In that ruling, the IRS identified what must result when a wash sale occurs because of an IRA trade: "The loss on the sale of the stock or securities is disallowed under section 1091 of the Code, and the individual’s basis in the IRA or Roth IRA is not increased by virtue of section 1091(d)."

also spelled out in IRS pub 550 - see page 56

Rev. Rul. 2008-5
Loss from wash sales of stock or securities. This ruling provides that if an individual sells stock or securities for a loss and causes his or her IRA or Roth IRA to purchase substantially identical stock or securities within a specified period, the loss on the sale of the stock or securities is disallowed under section 1091 of the Code, and the individual’s basis in the IRA or Roth IRA is not increased by virtue of section 1091(d).

A

Anonymous

what the op was asking about was not wash sales within an IRA but a wash sale when op sells at a loss in taxable account and then buys identical securities within the 30 days within his IRA or ROTH IRA

T

TomYoungAnswer

Employee

"Can I open my form 8949 in Turbotax and modify the required bases? Or do I need to do something else? Please post a link to any article that explains the process."

To answer your actual question: Yes, you can do that in "forms mode" if you are using a desktop product. To get the "correct" presentation here you'd enter your adjustment in column (g) and enter a "W" in column (f). This might prevent e-filing if you are forced to "override" amounts and codes that are already there, but should not pose a problem if you're simply filling in blank fields.

If you're using an online product then the forms aren't available to you for direct entry but you can accomplish what you're trying to do using "interview mode." Go back to the sale where you want to make the wash sale adjustment and edit the sale. Click on the "I'll enter additional info on my own" blue button and on the next page enter your adjustment in the "Wash sale loss disallowed" box. That will correctly report the trade on Form 8949.

N

nmvempatyAuthor

Thanks for the post.

Critter

Employee

Brokers have a mandate to report the cost basis including the wash sales disallowances ... are you SURE your 1099-B is not reporting these correctly ? And remember ... what happens in an IRA account stays in the IRA account ... it doesn't effect the regular broker's account one bit.

E

enatanson

You could do it in earlier versions of Turbotax. But his option is completely screwed up in Turbotax 2022. You cannot see the acquirement date, you do not have an access to the wash sale flag and finally Gain/Loss is not correctly computed. After 8 years of using Turbotax I had to prepare my Tax Return manually JUST TWO WEEKS BEFORE THE DEADLINE (... explicit).

fanfare

Employee

if you don't have access to the "W" code then there is a dedicated way to enter a "disallowed loss" and TurboTax will insert Code W for you

When Box A or D and basis is incorrect, do not modify the cost basis.

use an adjustment with Code B to get the correct gain/loss with your true cost basis.

similarly for wash sales use an adjustment with Code W to enter the disallowed loss as a positive number in col (g)..

When Box B or E and the basis is incorrect, enter the true cost basis in column (e).

E

enatanson

1) If the sale price is 11600, the basis price is 11000, and the GAIN reported to IRS is 1000

then it is a BUG regardless of any flag!!! PERIOD.

2) If I changed the date of the transaction and the basis cost it was done because I need to figure out myself whether it a loss, WS loss or gain based on the records I have (not Turbotax). I don't need Turbotax place the flag WS for me because it does not have a complete list of my transactions. I successfully used previous versions of Turbotax for 8 years. The access to the flag was removed in the new version Turbotax 2022 by a smart-ass manager trying to minimize customer's ability to verify how the Form 8949 was computed by Turbotax when Box B was checked. I have already elevated this issue to the Office of the President <[email address removed]>.