If a sale is flagged as a wash sale loss then that loss is not recognized when you enter the trade.
The loss on a wash sale is deferred and becomes part of the basis of the replacement security.
The loss gets recognized when you sell the replacement security.
If
you did not sell the replacement security this year, the amount of loss
you can claim this year is reduced by the wash sale amount.
In other words, if you had a
disallowed loss from a wash sale, make sure you add the loss to the cost basis
of the replacement stocks. When you eventually sell the replacement stocks, you
will be able to claim the loss at that time. For example, if you had a
disallowed loss of $500 on XYZ stocks, and the replacement XYZ stocks cost you
$5,000, your new cost basis will be $5,500. If you sell the stocks next year
for $6,000, you will have to report a gain of only $500.
The fix here is to go back to that trade and make sure Box 1g is
completely blank. If that doesn't fix things then completely delete the
trade if you didn't sell the replacement wash sale stock in 2016.
