My is my capital loss not allowed and not reported to IRS? Wash rule does not apply as I didn't buy any stocks, just sold at a loss. So why is loss not allowed?

Forum|Forum|3 years ago
February 16, 2023
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I sold the stock on 12/23/2022. I had purchased the said stock in June 2021. I have not bought any stocks since August of 2022, so wash rule should not apply. Why does my 1099 Consolidated form shows my loss is Not allowed and also not reported to IRS?
This is in the section of Long Term Transactions for Covered Tax Lots.

TurboTax Premier Online

MinhT1

If you correctly entered your loss making transactions in TurboTax, you may not see that long-term capital loss deducted from your income on your tax return, as you can only deduct up to $3,000 of that loss against other kinds of income, including your salary and interest income each year.

Any excess net capital loss will be carried forward to future years.

Please read this TurboTax article for more information.

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joule21Author

Thank you MinhT1 for your reply. I understand the $3000 loss deduction limit. That is not my issue.

My issue is that my 1099B is showing my capital loss for one of my Long Term Transactions for covered tax lots as "Loss not allowed also not reported" to IRS.

I sold some stocks on 12/23/2022 for a loss of -$2500. However, this transaction is showing up in 1099B as Loss not allowed also not reported to IRS. Since this was the only transaction I made on this account in 2022 or 2023, the 1099B's Total Capital Gain or Loss is set to 0 instead of -$2500. My loss should be reported and allowed as the Wash rule is not triggered (I did not buy the same/similar stock within 30 days before or after the sell).

My question is why would a transaction resulting in capital loss be marked as Loss not allowed and not reported to IRS?

I also understand that this is not a turbotax issue. Since my loss is marked as not allowed, when I import the 1099B, the loss does not show up in turbotax. The issue is my 1099B is showing the loss as not allowed. Why would that be the case?

Sincerely.

ThomasM125

That can happen when there is a merger where you exchange stock of one company for that of another. In that situation you may have a paper loss but it is not teated as an actual sale of securities, so the loss is not allowable. It is an unrealized loss so to speak.

But it doesn't sound like that is what happend to you, so you can ask the broker about it. The form 1099-B may be incorrect.

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