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Level 3
September 2, 2020
Question

Wash Sale

Pretty often on 1099-Consolidated I see a wash sale reported. However it isn't added back in the calculation of the realized gain. Is this because the wash sale was added directly to the cost or is it a mistake by the brokerage firm?

9 replies

Critter-3
Level 15
September 2, 2020

 Is this because the wash sale was added directly to the cost or is it a mistake by the brokerage firm?

 

Normally yes ... ask your broker for details. 

September 2, 2020

different brokers might present info differently.  

the usual way a broker would handle a sale that creates a wash sale loss is to report the sales price, cost and wash sale amount which would reduce the loss. 

 

there is also a situation where multiple lots are sold at one time. one lot results in a wash sale the others do not.  there is an overall gain on  sale so the wash sale amount will increase the realized gain

 

example lot A sales price 3900 cost 3800 is a wash sales so wash sale loss amount 100 resulting in no realized loss

lot b sales price 3900 cost sales price 3600 realized gain 200

broker reports sales price 7800 cost 7400 wash sale 100 realized gain 100 

 

 

generally the wash sale loss is added to the cost basis of the replacement securities 

 

we can't see what you're looking at so can't say if there's an issue with broker reporting

however, in the many years since loss sale reporting has been required every broker statement I've seen showed the following when there was a wash sale

sales price                     x

cost                                 y

wash sale amount        z As a positive number

realized gain or loss x-y+z

 

if you think the broker is misreporting you'll have to talk to them

 

for TT it shouldn't matter if in the 1099B worksheet sales price, cost and wash sale amount as a positive number are entered.  TT calculates the gain from these numbers.

 

 

note that many brokers report accrued market discount (line 1f on 1099b) which shows up on line 8a in TT

in the same column as wash sales (line 1g on 1099b).  how do you know which it is!  well on my statements sales are reported on 2 lines. if there is an amount for 1f or 1g 1f is on the first line and 1g is on the second line 

 

 

Level 3
September 7, 2020

Thanks, what I mean though is that sometimes they report it in the following way:

 

Proceeds:        100

Cost:                 50

Wash Sale:       10

Realized Gain: 50

 

It looks like it's not taking the wash sale into consideration, but I was wondering if it's included in the cost basis already.

Critter-3
Level 15
September 7, 2020

A wash sale adjustment on a GAIN ???  Call the broker and ask them to explain their reporting methods or look at the instruction booklet that comes with the 1099-B or check online.

 

Level 3
October 6, 2020

Here is an actual example of what I mean on a Morgan Stanley 1099-Consolidated (But I've seen it several other times):

 

Proceeds:                        $80,423.32

Cost:                                 $78,368.62

Wash Sale Disallowed: $4.22 

Gain:                                 $2,054.70

 

Wash Sale Disallowed should be added back to the basis and the gain would be $2,058.92, but it looks like they already calculated the wash sale disallowed amount directly in the basis and the 4.22 is there for info purposes only. 

Level 3
October 6, 2020

Nevermind, I realize I was looking at the summary as opposed to the individual transaction, thank you.