Wash Rule Clarity Closed Positions

Forum|Forum|3 years ago
October 17, 2022
2 replies
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I have completely closed my stock positions (sold all, currently own 0). It has been 31 days and I had significant wash sales up until September 7.

Example:

Proceeds: 1000

Cost Basis: 1400

Disallowance: 2000

Gain/Loss: (400)

Question:

What are the impacts of selling my wash sale positions on the 1099-B?

Will the wash sale disallowed still be required for reporting or will the losses be recognized in my cost basis of the sold positions? How would I report the losses?

In the above example would I be required to recognized 1600 gain or (400) as a loss?

Capital Gains

Best answer by Mike9241

when there is a wash sale the disallowed loss is added to the cost basis (and is reported this way on the 1099-b)of the replacement security that caused the wash sale

so say you paid $1000 for a security that created a wash sale and lets say the disallowed loss was $400

you now sell this security for $2000. it's supposed to appear on the 1099-B as

sale of X $2000, tax basis $1400 (the $1000 you paid + the previously disallowed loss)of $400) gain $600

if all securities were disposed of before 12/31/2021 all previously disallowed wash sale losses should not be realized and included on 1099-B. no adjustment should be necessary

for the sales with wash sale losses you still need to report them so the disallowed losses are shown.

failure will result in misreporting and you will almost certainly get a notice from the IRS that what you reported does not match the 1099-B they got.

your example does not make sense.

Anonymous_

Employee

@Mike9241

Mike9241Answer

when there is a wash sale the disallowed loss is added to the cost basis (and is reported this way on the 1099-b)of the replacement security that caused the wash sale

so say you paid $1000 for a security that created a wash sale and lets say the disallowed loss was $400

you now sell this security for $2000. it's supposed to appear on the 1099-B as

sale of X $2000, tax basis $1400 (the $1000 you paid + the previously disallowed loss)of $400) gain $600

if all securities were disposed of before 12/31/2021 all previously disallowed wash sale losses should not be realized and included on 1099-B. no adjustment should be necessary

for the sales with wash sale losses you still need to report them so the disallowed losses are shown.

failure will result in misreporting and you will almost certainly get a notice from the IRS that what you reported does not match the 1099-B they got.

your example does not make sense.

TM79Author

"for the sales with wash sale losses you still need to report them so the disallowed losses are shown.

failure will result in misreporting and you will almost certainly get a notice from the IRS that what you reported does not match the 1099-B they got."

Ok, so how does the impact the gains/losses? I am a bit confused on the impact of not holding the losing positions.