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Level 4

Question

How should I claim stock wash sale loss disallowed amount back in following year?

Forum|Forum|7 years ago
June 7, 2019
3 replies
29 views

My situation is pretty messy due to heavy day trade in Robinhood.

In 2017 I had heavily day traded a penny stock and because of wash sale rule, I ended up paying $6000 for the wash loss disallowed amount for the tax year 2017. At that time my plan was to sell everything in 2018 and deduct above amount from the 'gain' in 2018 if there any.

I kept day trading the same stock and sold everything in June 2018 and never bought back any share as of today.

However from the 2018 1099B I still have wash sale loss disallowed for $17,000 and a 'loss' of $7000 for the same stock in 2018... so again I will have to pay the difference because the wash sale rule even though I am at loss...

I am quite confused about the disallowed amount again because I have sold everything in June and never bought back after that... And if I don't claim the wash sale disallowed amount this year how can I claim it back next year as I don't have the shares no more?

So How should I claim my wash sale disallowed amount back in this case? How much do I actually need to pay?

Any idea is well appreciated!

TurboTax Premier Windows

TomYoung

Alumni - Champ

The broker is supposed to report each and every wash sale loss that they know of. With tons of day trading going on the dollar amount the broker reports can be a big number, and you need to account for it in your income tax return. But simply entering the total of wash sale losses noted on the 1099-B is NOT the same thing as not getting any tax benefit; since wash sale losses are added to the "out of pocket" cost of the replacement shares, when you finally sell those shares and stop trading, the wash sale losses are included in the basis for those shares.

If your broker is really geared up for proper reporting I'd expect that they are accurately doing the accounting for you. You should be able to test that by looking at the details of the trades.

Tom Young

nestlenAuthor

Level 4

Thanks Tom... I have checked the transaction history in the account and looks like the broker didn't add my wash sale disallowed sell price as purchase price to later repurchase... but if I just wipe out the wash sale disallowed amount it's not right either... The brokerage Robinhood uses is APEX Clearing. Do you happen to know if they would do accounting properly in this case?

aa119

Level 2

I have been using summary tab and filling my taxes for few years. I always thought Robinhood's 1099 will calculate properly and always filled looking in to summary tab.. Thankfully i don't trade with any other broker.. so will this cause an issue for me in any way ?

Does Robinhood calculate it correctly now for 2019 & 2020 ?

QUESTION:

If I had a wash sale loss in a fiscal year, ideally the disallowed loss should be added to cost basis of the same stock and when it is sold for good or 30+ days.. then we can realize the loss.

My question: when we file tax we look at the summary on 1099 and fill the amount. Assuming the cost basis is automatically updated by Robinhood for following year. is that right?

Example:

In June 2018 bought 1 share of company (XYZ) for $15, next day sold for $10, following day bought again for 13$.

2018 1099 shows:

Wash sale disallowed: $5

App shows cost basis of share is $13

For me Cost basis of the share is $18

In Feb2019 I sold the share(XYZ) for $15

2019 1099 Should be what, will it should me a loss of $3 based on $18 cost basis or will it show me a profit of +$2

option1) 15-18 net loss on share (xyz) = -$3

option2) 15-13: net gain on the share = +$2

Mike9241

Level 15

does Robinhood have a phone number? if so call them. they are the only ones who can answer your question. it may be that the 1099 summary just lists purchases and sales and is not an official form. 1099-B is the official one and I doubt that Robinhood has issued it this early. on the official form, the IRS requires reporting of wash sales and adjustment of cost so the correct gain is reported when the shares creating the was sale are sold.

Mike9241

fanfare

Level 15

TD Ameritrade just issued consolidated 1099-B yesterday.

All wash sales are marked with "w" or "wash sale"

If Robinhood is issuing you an incorrect 1099-B, maybe you need a new broker.

As mentioned before, IRS requires your broker to track and detail your wash sales.

Make sure you're looking at your "consolidated 1099-B for 2020."

vicky12

Level 2

Nestlen, I was in the similar situation as you. I can't see the next purchase proceed updated as per robin-hood trade statements and 1099B followed by wash sale loss disallowed.

This is the issue with 2019, 2020 tax returns, I had to bear the losses. Robinhood takes forever to reply to emails and when they reply its mostly irrelevant. Not sure whether they can fix this or update me if I can adjust from my side. Were you happen to adjust cost basis from your side. If so, how did you adjust it?

Appreciate your help.

ReneeM7122

Level 9

You are correct, Robin Hood is responsible for adjusting the cost basis of the replacement stock and the adjusted basis that's reported on your 1099-B when you have a disallowed wash sale. Because of this, TurboTax will calculate a loss for you to bear by default, since it doesn't have information about the replacement stock.

To manually adjust the cost basis of disallowed stock, enter the transaction exactly as it appears on the 1099-B. You'll see a bar at the bottom of the screen that says I'll enter additional info on my own. Then look for the option to correct the cost basis and make the adjustment.

@vicky12