Where do I enter Wash Sale Loss Disallowed when manually entering sales section totals from my 1099-B?

[Pocketsidewalk]

I am unable to import my Betterment 1099-B due to a large number of sales (over 4,000). When manually entering the 1099-B details, I chose "Enter sales section totals" because manually entering each individual sale is impractical.
For each sales section, I can enter the total proceeds (sum of all Box 1d) and total cost or other basis (sum of all Box 1e). However, I don't see any way to enter the Wash Sale Disallowed amount (sum of all Box 1g) for each sales section.

How do I enter the Wash Sale Disallowed amount for each sales section total?

[DianeW777]

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 for future sales. To complete the tax return for the IRS, when summarized transactions are entered, follow the steps below.

If you are e-filing your tax return (recommended), then mail your statements along with Form 8453 to: 

Internal Revenue Service

Attn: Shipping and Receiving, 0254 

Receipt and Control Branch 

Austin, TX 73344-0254

If you need a blank Form 8453, you can download this pdf, enter your address information and check the box for Form 8949 (this form is really just a cover sheet).

[Pocketsidewalk]

Thank you for your reply. Are you suggesting I enter all 4,000+ sales individually? That would be impractical, and I'm not certain TurboTax even supports that man transactions.

On my 1099-B, for each section total, there is a total for Proceeds (1d), Cost Basis (1e), and Wash Sale Loss Disallowed (1g). The net gain/loss is calculated by subtracting the cost basis from the proceeds. TurboTax allows me to enter the proceeds and cost basis and then calculates the net gain/loss. My concern is that there is no place to enter the Wash Sale Loss Disallowed amount. Shouldn't the Wash Sale Loss Disallowed amount be added to the net gain/loss?

[DianeW777]

No. The wash sale disallowed is not added to the net gain/loss rather it is adjusted and suspended so that it does not affect the total gain or loss for any pending wash sales.  The rub is that the broker only knows when a wash sale occurs, not when a wash sale no longer exists. This can spill over between two tax years.  Likewise you can have a wash sale during a tax year, and then fully dispose of the stock in the same year which would eliminate the wash sale rule for the final sale of the same stock.

It's up to you to know when you no longer have to consider the wash sale rule. 

Example: 

X bought 5 shares of ZZZ stock, at $5 per share, then sold it for $3 per share, however immediately before the original 3 shares were sold, X bought another 5 shares at $5.00 per share.  

     $25 for the first block of shares

       15 is the proceeds creating a $5 loss 

The $5 loss is now added to the cost of the new shares for an overall cost basis of $30.  

Once the second block of shares is sold (5 shares with cost basis of $30) without any repurchase with in the 60 day window (30 days before or 30 days after the sale), and if they are sold at a loss, then no wash sale exists on the sale, and a loss is allowed.

You do not have to enter 4000 transactions, you can combine the wash sales into one entry, once you decide the transactions that are still open. Then include your statement with the detail.

[Edited: 03/09/2021 | 10:58a PST]

[Pocketsidewalk]

So, back to my original question. Where do I enter the Wash Sale Disallowed amount from 1099-B box 1g?

I cannot import the 1099-B, nor can I enter the transactions individually because there are over 4,000 transactions which TurboTax does not support. My only option appears to be to use the Section Totals, but I cannot find a place to enter the Wash Sale Disallowed amount.

[DianeW777 · Accepted solution]

The wash sales must be separated out from all other sales, then combined if you want to enter a summary total, or one transaction. 

• Add all the proceeds and enter the same amount as the cost basis, keeping your sheet (and mailing to IRS) for the breakdown. This would be only for wash sales that remain open as of January 1, 2021. You won't see the disallowed amount in your tax return, only on your backup detail list or statement.

Maybe the following information will help you to see how to summarize your sales in TurboTax that are NOT wash sales to complete one entry for long term sales and one entry for short term sales.

• Long term is a holding period of more than one year and receives capital gain tax treatment (0%, 10%, 15%, 20% depending on your regular rate of tax)
• Short term is a holding period of one year or less and receives ordinary gain tax treatment (your regular rate)

In short, you will have three entries in your TurboTax return.

1. Short term sales summary
2. Long term sales summary
3. Wash sales summary

[thaiken22]

Bro, I got the same problem. Took me 1 hour to go through with the support to figure out. After you end the proceed and cost basis, you should see the check box below "I need to adjust my total cost basis".

Fill in your wash sales at "I need to adjust my total cost basis", select the W (nondeductible loss from a wash sale) check box, that is how you enter your wash sales.

Good luck!

[xz4]

Did you add wash sales to the Gain/Amount Loss or is that automatically figured in?

This is where I am getting tripped up because one Turbo Tax expert told me to add, another one said it was automatically done. 

[thaiken22]

the gain loss will auto calculated. You should see the gain loss amount smae as your 1099 doc

[pmboutte]

Where do I have to enter the wash sale?

[elvodaoz]

When you type in amount for Proceeds then amount for Cost Basis, look down next line under, there should be check box to click on.  Check box will say something like Adjusted  Cost Basis, click on it, scroll down to where it says something like W(wash sale loss not allowed) can't remember exactly what it said. Don't forget to type in in the bar the wash sale disallowed amount, then click done, that should calculate it.

[appiraj]

Hi,

If i choose cost basis adjustments and enter wash sale disallowed amount. my profit  amount increases and does not match with 1099b given by fidelity. Can you help me what amount need to be entered in cost basis and proceeds ? 

-Pratima

[elvodaoz]

It should be very simple, but looks like you need to learn how to read you'r Fidelity's Tax Document.

Look for something that says Summery, its usually on  one of the first 3 pages on your Fidelity's Tax Document.

Then look at what type of trades you made, whether its short term or long term trades. Then look at the  numbers, usually above first number will say Proceeds(that indicates that anything under that word is Proceeds)  ,  above the second number will say Cost Basis(that indicates that anything under that word is Cost Basis), above 3rd number will say Wash Sale Loss Disallowed(you getting the point?) and above 4th number will say Total Gain/Loss(get it?). So, all number needs to be entered to be calculated except 4th(which is you'r Total Gain/Loss don't have to be entered) number .  You type in Proceeds amount in the first bar, then Cost Basis in second bar, then and this is very important, look at next line under, there is a box, it says something like Adjusted Cost Basis, click on it. More options will pop up, in the bar that says usually 0.00, type in your Wash Sale Loss Disallowed amount. After that, scroll down and click or check mark one of the boxes, its usually the box that says something like: W(wash sale loss not allowed). Then press done. If that don't work for you than you need someone who is pro. at doing taxes, to look at your tax documents, there could be issues. Good Luck.

[justnow999]

Hello,

My tax return is accepted but I didn't include wash sale from 1099b.

How to fix this problem?

Thank you

[pkincy]

What a simple straightforward answer.  I wonder why all the experts couldn't answer it?   Thank you.

I saw where to enter it but couldn't find the code to use.  Appreciate your help.