Can I deduct wash sale loss from my total positive capital gains for the year
Can I deduct wash sale loss from my total positive capital gains for the year
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Spasski · External communityPost link
External question — Personal Finance Stack Exchange
Author: Spasski
Original post: https://money.stackexchange.com/questions/136798
License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/
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Here is my simplified wash sale scenario.
Let's say I traded only 2 stocks last year:
XYZ for a total of $500 wash sale loss.
ABC for a total $1000 gain.
Txns for XYZ:
05/28/
2019
BUY 100 shares for total $2000
09/02/2020 SELL 100 shares for total $1000
09/15/2020 BUY 100 shares for total $500
11/02/2020 SELL 100 shares for total $1000
Txns for stock ABC:
07/01/2019 BUY 10 shares for total $1000
11/18/2020 SELL 10 shares for total $2000
If I disregard the wash sale rule, my tax gains for the year should be +500$.
But my broker reports a wash sale disallowed in field 1g on 1099-B and sets the loss for XYZ to the year at 0. Here is the report
1a. 1b 1c 1d. 1e. 1g Wash Sale Disallowed Gain or Loss
XYZ 100 05/28/19 09/02/20 1000 2000 **1000** **0.00**
And now I have to pay taxes on +1000$ gains for the year instead of just +500.
What should I do?
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Bob Baerker · External communityPost link
External answer — Personal Finance Stack Exchange
Author: Bob Baerker
Original post: https://money.stackexchange.com/a/136801
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If the replacement shares for a wash sale are closed in the same tax year as the realized loss and there is no subsequent wash sale violation, you have a lot of tax accounting adjustments but the total loss can be deducted in that tax year. It's only a problem if the replacement share position isn't closed in that tax year and therefore the apportioned wash sale violation cannot be deducted until the next tax year, assuming no additional wash sales that further delay deducting the loss.
You've posted your broker's wash sale explanation for the 100 shares sold on 9/02/20. It is correct. But where is their accounting for the replacement shares sold on 11/02/20?
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Quoted from Forex.com.bd-Editorial External answer — Personal Finance Stack Exchange Author: Bob Baerker Source score (net votes, not local likes): 3 Original post: https://money.stackexchange.com/a/136801 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. If the replacement shares for a wash sale are closed in the same tax year as the realized loss and there is no subsequent wash sale violation, you have a lot of tax accounting adjustments but the total loss can be deducted in that tax year. It's only a problem if the replacement share position isn't closed in that tax year and therefore the apportioned wash sale violation cannot be deducted until the next tax year, assuming no additional wash sales that further delay deducting the loss. You've posted your broker's wash sale explanation for the 100 shares sold on 9/02/20. It is correct. But where is their accounting for the replacement shares sold on 11/02/20?
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