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

[fanfare]

"the summary lines for entering these types of trades in Turbotax do not allow for reporting wash sales amounts.  "

You can summarize wash sales if you mail in the details to IRS.

Or you can  import or manually enter each of the wash sales to Form 8949.

IRS requires transactions with adjustments (e.g. was sales) to be itemized.

TurboTax and all tax software supports this.

[RAD1TAX5]

Thank you for actually providing a Software-focused answer.  Tax explanations dont equate to SW how-to.

[RDDS2]

Where does the wash sale summary go in Turbo Tax?

[GeorgeM777]

You don't enter wash sale losses into TurboTax.  In contrast, you do enter realized gains and realized losses.  Losses from wash sales are disallowed and if, or when, you repurchase the stock that triggered the wash sale, that disallowed loss gets added back to your cost basis.

You need to track your wash sale losses so you know your adjusted cost basis.  In most cases, your brokerage firm will identify wash sales, and you will know the amount of the disallowed loss.  Keep your records in the event you need to adjust your cost basis in TurboTax when the wash sale losses are no longer disallowed.  In the event you repurchase the stock that triggered the wash sale and sell it for a gain, the wash sale rule no longer applies because the gain eliminates the previously disallowed loss.

@RDDS2 

[myersnnn]

Why wouldn't they put it in as 1g? I opened this page multiple times looking for a wash sale and they bury it as a letter W with a string description.

[DianeW777]

A brokerage knows when a wash sale occurs, they do not know when it's over.  Likewise you must know your wash sales so that you know when you can use it and when you a loss is not allowed. 

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.  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 $10 loss 

The $10 loss is now added to the cost of the new shares for an overall cost basis of $35.  

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.

Please add more detail if you need further assistance and one of our tax experts can help.

[RMB_68]

I don't know if this thread is still active, but here's my question.  The Schwab 1099-B adds disallowed losses to the basis of subsequent sales.  Which I understand, however, it continues to do this for all future buys so that the total Cost Basis is a meaningless number.   

Scenario 1: 

First disallowed loss - xxshs proceeds of $100 with basis of $120 will show zero loss.  You suggest that the basis be entered as $100 to get to zero g/l.  

Scenario 2:  

Disallowed loss of $20 above is added to subsequent basis.  Therefore, total basis of $120 ($100 above and $20 adjusted here) which is correct.  However, The Schwab 1099-B will show $140.  Therefore Column (e) of Form 8949 won't match the 1099-B which I thought how it should work.

If however, you match Column (e) to the 1099-B, you have to make bogus adjustments to get to the right gain/loss.  

Not sure if I stated this clearly, but this must be a common thing though I can't seem to find the right thread here to address it.

[RMB_68]

To be clear, my question isn't about the operation of wash sales - just how the 1099-B works (at least for Schwab) and how to make it work on the 8949.

[TaxQuestionForGuru]

Hi DianeW777,

EDIT: I got a detailed response on the other thread with the bad news.  Sounds like they need to have the MTM designation or they will owe hundreds of thousands of dollars b/c of the wash rule (even though they didn't make that much).  I'm going to direct them to this thread to ask their own question in light of how bad the news is.  :(

I asked this on another thread but see you are a guru at this and I am trying to help a friend who is really scared right now.

QUESTION: 

I understand the rules for Wash Sales, but saw a scenario where someone seemed owe hundreds of thousands of dollars b/c of day trading all year where the gains all were calculated but the 1099 from Broker showed most all losses were disallowed.

Does that person need to pay taxes on all of the "fake" gains (hundreds of thousands) b/c most of the losses show as disallowed?  The stock dropped from then the following year, so no gains ever materialized to be able to realize in later years it seems.

OR is it correct protocol to edit the "disallowed" losses due to wash sale on the 1099 Broker form to accurately show the true net gain (if any)?  

Mainly the issue is the fake gains being taxed b/c of disallowing all of the actual losses due to the wash sale rule.  

They are panicking! I remember seeing great advice on here before, so thought I'd check here. 

Thanks so much for any insight.