Wash sale loss disallowed Robinhood

Forum|Forum|5 years ago
March 19, 2021
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I've received 1099-B from Robinhood and there is $8000 reported as wash sale loss disallowed. I've successfully imported 1099-B into the Turbotax, but I don't see "Wash sale loss disallowed" being counted anywhere. Do I have to go to each entry and update the wash sale loss under each entry? Or is it already accounted for?

I'm not looking for any tax savings, just want to do the right thing!

Best answer by JohnB5677

A wash sale occurs when an investor sells or trades a security at a loss, and within 30 days before or after, buys another one that is substantially similar.
It also happens if the individual sells the security at a loss, and their spouse or a company they control buys a substantially similar security within 30 days.
The wash-sale rule prevents taxpayers from deducting a capital loss on the sale against the capital gain.

When the wash sale is disallowed, the amount of the loss is added to the basis of the second group of stocks that you purchased. If those stocks were sold prior to the end of the year the wash sale would have been resolved.

It still should be reported on your 1099-B in box 1g.

JohnB5677Answer

A wash sale occurs when an investor sells or trades a security at a loss, and within 30 days before or after, buys another one that is substantially similar.
It also happens if the individual sells the security at a loss, and their spouse or a company they control buys a substantially similar security within 30 days.
The wash-sale rule prevents taxpayers from deducting a capital loss on the sale against the capital gain.

It still should be reported on your 1099-B in box 1g.

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techie123Author

I understand 1g. My question is, do I have to update 1g in the Turbotax? Or is it already taken care of while importing the 1099-B into the Turbotax.

DianeW777

You should see this accounted for on your tax return in TurboTax. TurboTax recognizes wash sale rules and applies them according to your download/import of your statement. What TurboTax will not know is whether all of the wash sales shown on your statement should apply.

In other words, the wash sale rules apply when you sell and repurchase within the 60 day window, however, if you later sell the entire blocks of stock that fell into wash sale rules then the cost basis is changed by adding the unallowed loss to the cost basis. This may require an adjustment to the basis manually on your part.

You can view your tax return before you file it by following the steps below.

TurboTax CD/Download version: Click Forms in the top right when your return is open > On the left forms tree scroll to Form 8929 or worksheets to see the adjustment for the wash sales.
TurboTax Online version: How do I preview my TurboTax Online return before filing?

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a15973

Hi - I have a slightly different question about my wash sales loss disallowed from Robinhood. Some of my transactions were flagged with (W) but I stopped trading any of those stocks in July/Aug 2021 and sold all of my positions at the time. The 1099 that I received from Robinhood still has all the wash sale loss disallowed and when I looked in detail to the final sale of those stocks, the cost basis was not calculated using the updated amount of the wash sale. Does anyone knows if Robinhood even does this calculation or I have to go and do it manually? Currently what I see is that even after all positions were sold that I have a Cost of about $130.000, Proceeds of about $100.000, wash sales for about $20.000 and only $10.000 are recognized as a loss. Considering I sold everything in July/Aug, shouldn't the wash sales have been released or added to the cost basis? Your advise would be appreciated. Thanks!

Critter-3

First this is a question you need to ask Robinhood however if you do all of your own calculations you should get the same result as they did which included the wash sale disallowances along the way.

a15973

Thank you for your quick response. I did already sent a message to Robinhood asking the same question. I did the calculation on one of the stocks that I didn't trade a lot, since it was easier... and on the first batch of stocks I sold at a profit they used all that in the calculations of the profit/loss bucket, but when I bought back same stock within the 30 days... all that was sold on a loss they flagged it as washed sales, but here I never bought back again.... and all that loss was under wash sales disallowed. So at the end... imagine I had a profit of $100 when I sold for the first time, then a loss of $1000 when I sold the last time in Jul/Aug and all this loss was flagged as wash sales. On my 1099 for that stock what I see at the end is I have $1000 as wash sales loss disallowed and $100 profit. I was just trying to understand in a situation like this, if I should manually consider the $1000 as a loss and $100 as a profit and manually net it to $900 or I'm not allowed to do that until Robinhood provides an explanation or corrects the 1099? If I understand correctly how this works the $900 loss should have been added to the cost basis of the second tranche of stock in the moment of the sale, and I see that it didn't for the simple fact that in the final calculations the (cost - proceeds = wash sales + loss/profit)... and that would make sense if I still had the stocks with me, and the wash sales would carry on... but I haven't had any of those stocks for months... and unless I manually consider the wash sales in the total equation, or I will have to pay taxes on something I didn't gain a single buck a stopped trading months ago.

waisaacs

Hi Intuit TT community - I'm going to Pile On this discussion, as I also have questions about Robinhood's assessment of wash sale disallowed designation on the 1099B. For those whose advice is to go hire a good tax accountant to take care of this, I would say that we use TT because we think we should be able to understand and do our taxes ourselves. And echoing others' comments here, if I'm going to sign the return I need to know it's correct, whether that means trusting RH or a good tax accountant.

Generically, my questions are in two parts:

1) Is there a definitive list of rules that describe the wash sale rules as applied to stocks and options specific enough to follow? I've read the IRS pubs on this ("substantially identical" and "consider all the facts and circumstances in your particular case") and find the instructions lacking. I've read as much interpretation discussion as I can (is there a "replacement purchase" matching the prospective wash sale / loss transaction) and again don't have a rule in hand.

2) If I decide that RH has made a mistake and they won't correct it, what steps do I have to take in TT to adjust and document this?

I'll throw in one of my specific examples that I believe RH is flagging as a wash but is not clear to me should be. Consider the following series of trades, assume everything is in the +/- 30 day window and for the purposes of discussion the options have the same expiration date:

- Buy NVDA 200 Calls $800

- Sell NVDA 200 Calls $500 [loss of $300]

- Buy NVDA 190 Calls $800

- Sell NVDA 190 Calls $1500 [gain of $700]

- Buy 2 shares NVDA $400

RH seems to be flagging the $300 loss as a wash sale, I think because of the 2 share purchase within the window. I would claim that the 190 Calls were the "replacement securities" for the loss sale of the 200 Calls, and that when I sold the 190 Calls, the wash sale resolved. I'm still digging through the 1099, but I think there are situations where the share purchase came before the options transactions instead of after, but still in the +/- 30 day window, and again it was flagged.

I do realize I'm asking a tax question on a software support community discussion thread, but it's clear that there is a lot of general interest in this community regarding these wash-sale related tax questions, and subsequently how to make the appropriate adjustments in TT if you're stuck with a broker 1099 you don't agree with.

Thanks,

William