Investors & landlords

I should have made it clear that the instruction I posted was for preparers of Form 1099-B, that's not directed at taxpayers.  If you have a wash sale loss situation you are supposed to report it, even if it isn't reported to you.

 

In your situation you should adjust your taxable sale to reduce the amount of the loss.  When you buy replacement shares in the wash sale window you defer the amount of the loss in a ratio to number of shares sold at a loss vs. number of replacement shares.  So if you sell 100 shares at a loss of $800 and buy 25 replacement shares in the wash sale window you'd report only 3/4ths of the loss.  I'm not sure exactly how the amount gets adjusted when you buy an option on the stock that was sold; my guess is that the number of shares covered by the contract would be used to calculate the ratio.