WASH SALE STOCKS

Forum|Forum|5 years ago
March 31, 2021
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I am using TurboTax Home & Business and i received a 1099B for stock transactions in 2020. When i entered what was reported on 1099B to Turbotax i entered proceeds $62,717.72 cost basis $65,796.04 wash sale loss disallowed $385.73 realized gain or loss ($3,078.32) but on form 8949 it shows a code W and a different loss amount of $-2,692. For another 1099B I also get a different loss amount it creates a gain when entering the wash sale code W and instead of showing realized loss of $3,620.31 it shows a gain of $3,689. Is this correct? Any advice and help will be appreciate it.

TurboTax Home & Biz Windows

ThomasM125

The "W" means there is a wash sale involved, which means you sold an investment at a loss and purchased it back less than sixty days later. The wash sale is not allowed as a tax deduction, so your realized gain is not the same as your gain reported on your tax return. You have to ignore the wash sale amount when calculating your gain as is appears on your tax return.

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eemr19841Author

Employee

Thank you for your response. So I do not have to enter the wash sale loss amount in Turbotax? When I do enter the wash sale loss amount it shows as W and box G of form 8949 but for some reason instead of a realized loss of -$3,078.32 as what it shows on 1099B from E-trade it actually adds it back creating a gain of like $4k plus. Is it correct?

DianeW777

Yes, that is correct assuming the the stock that originally created the wash sale is still being held by you. See the summary of wash sales next.

Wash sales cannot be combined into section totals. They should be entered individually so that you can track your cost basis and know when you are allowed to use the information on a final sale.

Wash Sale Rule Defined:

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.

Affect on Cost Basis:

The loss that occurs on a wash sale is added to the cost basis of the shares purchased that created the wash sale.
When all shares are sold and there is no repurchase, that increased cost basis will be used in full and used to determine gain or loss.

As long as you are tracking the wash sales and are not using them on the tax return when you are not allowed, then you can simply enter the same cost basis as the selling price. This will reconcile your tax return with your Form 1099-B Proceeds which is what the IRS is comparing.

Be sure to keep good records so that you know when to add those losses to cost basis for future sales.

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amanmarwah

HELLO ALL NEED HELP ASAP,

I am looking at my etrade WASH SALE LOSS DISALLOWED section and it looks wrong. For example I was buying and selling the same stock 40-50 times during the year, when I would take a wash sale loss disallowed it would not be added to the cost basis the next time I bought the stock like 40 days later, the cost basis showing on the 1099 is just the market price * shares + commission, I don't see for any of the buys I did all year where the wash share loss from prior sale was carried over to new purchase. What should I do?

RobertB4444

@amanmarwah You need to contact your broker. If you believe that the wash sale loss amount is incorrect you need to contact them to find out how they calculated it. If you can find an error there they should issue you a corrected 1099-B. The only other option is to change the amount that is on the 1099-B to what you believe it should be and that is not recommended as it will not match the numbers on the form received by the IRS.

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aweeva

Etrade doesn't adjust the cost basis for wash sales on 1099. The rules for wash sales on 1099s is completely different than the rules for wash sales on your taxes. They simply assume that its all disallowed if they qualify it as a wash sale.

Etrade could automatically adjust the cost basis for you, but they dont.

Turbotax could automatically adjust the cost basis if they have multiple years of 1099s in their system since all of your trades are in their system but they choose not to

amanmarwah

Can you explain the rule for wash rules on 1099 is different than for taxes

GeorgeM777

The wash sale rule disallows a loss on the sale of a security. Generally, for many taxpayers, it gets triggered when you sell a security at a loss and then re-purchase the same security, or a similar security, within 30 days. If that happens, the loss that you realized when you sold the security gets added back to the cost basis of the purchase that triggered the wash sale. If you want to realize the loss, then don't re-purchase the same or similar security within 30 days after a sale that results in a loss.

Does your 1099-B reflect whether a particular trade was a wash sale? Remember, the wash sale only disallows losses. In effect, it increases gains because when you disallow losses, that tends to increase gains. And it only applies to losses. If you had a gain and then later repurchased the same or similar security, no matter when you made your purchase, the wash sale rule does not apply.

@amanmarwah

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