@nexchap, thanks for the concise answer.
I was on the phone with my broker, Fidelity, discussing a flagged wash sale, which I'll muse about in a bit, and was told their software uses the midpoint of the oldest and newest lot for holding period adjustment in the case where multiple lots are sold in a single order and trigger a wash. I suppose this is okay too?
Interested in brokerage dating of lots acquired through PTP distribution reinvestment? Read on brave soul.
Fact:
Shares were acquired through reinvestment of distributions 32 days after a sale for a loss. The broker, Fidelity, flagged this as a wash sale.
Question:
Why was the transaction flagged a wash sale, the repurchase was more than 30 days after the sale for a loss?
Answer:
"There are two dividend reinvestment plans (DRIP) available at Fidelity, the DTC Discount Plan and Fidelity Dividend Reinvestment Service (FDRS). Eligibility for the DTC Discount Plan is determined by the issuing company and cannot be changed by Fidelity or the client. Securities ineligible for the DTC Discount Plan automatically reinvest through FDRS.
Under FDRS, Fidelity identifies all clients that own the dividend-paying security and then goes to the market 2 business days before the payable date to acquire the additional shares needed to facilitate dividend reinvestment for our clients. The reinvestment price is determined by the average share price for the shares purchased, and shares are allocated to client accounts on the dividend payable date in proportion to the number of shares the client owned as of the dividend record date."
DBA, DBC, and I assume most, if not all, PTPs don't qualify for DTC. This means my shares are reinvested using FDRS and dated the payable date - 2, though not acquired by me or reported to the partnership until the payable date. Example: the payable date is 3/24, Fidelity's records and eventual 1099-B date this lot 3/22, and partnership records show the lot acquired on 3/24.
This seems right if I squint. The partnership uses the date I acquired, so all their calculations will be correct. Regarding DRIP and dating, I'm fuzzy on the mechanics, but I think I'm effectively gifted the shares that were purchased at payment date - 2 and the broker retains the distribution; there is no brokerage statement generated for the transaction, though veneer is posted to the account on payment date to show I "traded" the distribution for the shares. In this case, it makes sense to use the payment - 2 date when assessing for washes.
