1099B Summary Totals and Massachusetts State

[Mr Washsale]

I have multiple brokers Fidelity (no wash sales and one stock sale) and TD Ameritrade (wash Sales).  Can I download/import fidelity and then manually use the summary of TD Ameritrade (final figures - Proceeds, cost basis and wash sales disallowed ?   

Does Turbo tax merge all this info (both fidelity and td)?

After I complete the 1099B Summary, I am assuming I have to send in a 8949. Should Fidelity and TD Ameritrade be on one 8949 form or split them? Not sure what to send in.

When I went over to the State of Massachusetts return, Capital gains and losses popped up on review and Turbo Tax Desktop wanted an exact date for the date of sale and date acquired, but the summary totals.  Do I enter Various in Massachusetts or? 

Thank you for the help.

[DianeW777 · Accepted solution]

Let's break it down.  First, an import of two different financial companies will not combine with each other on the specific forms (1099-B, 1099-DIV, 1099-INT).  They will be listed separately in your tax file under the appropriate sections.  If you import, you may have to do manual adjustments to correctly report  your sales.

Wash sales cannot be combined into section totals.  They should be entered individually so that you can track your cost basis and know when you are allowed to use the information on a final sale.

When does a Wash Sale End?

The wash sale disallowed is not added to the net gain/loss rather it is adjusted and suspended so that it does not affect the total gain or loss for any pending wash sales.  The rub is that the broker only knows when a wash sale occurs, not when a wash sale no longer exists. This can spill over between two tax years.  Likewise you can have a wash sale during a tax year, and then fully dispose of the stock in the same year which would eliminate the wash sale rule for the final sale of the same stock. 

It's up to you to know when you no longer have to consider the wash sale rule. 

Wash Sale Rule Defined:

• A wash sale occurs when an investor sells or trades a security at a loss, and within 30 days before or after, buys another one that is substantially similar.
• It also happens if the individual sells the security at a loss, and their spouse or a company they control buys a substantially similar security within 30 days.
• The wash-sale rule prevents taxpayers from deducting a capital loss on the sale against the capital gain.

Affect on Cost Basis:

• The loss that occurs on a wash sale is added to the cost basis of the shares purchased that created the wash sale.
• When all shares are sold and there is no repurchase, that increased cost basis will be used in full and used to determine gain or loss.

As long as you are tracking the wash sales and are not using them on the tax return when you are not allowed, then you can simply enter the same cost basis as the selling price. This will  reconcile your tax return with your Form 1099-B Proceeds which is what the IRS is comparing.

Be sure to keep good records so that you know when to add those losses for future sales. To complete the tax return for the IRS, when summarized transactions are entered, follow the steps below.  (TurboTax will include this form with your file if you answer the questions about summary totals.)

If you are e-filing your tax return (recommended), then mail your statements along with Form 8453 to: 

Internal Revenue Service

Attn: Shipping and Receiving, 0254 

Receipt and Control Branch 

Austin, TX 73344-0254

If you need a blank Form 8453, you can download this pdf, enter your address information and check the box for Form 8949 (this form is really just a cover sheet).

[Mr Washsale]

So what happens if you go to a third party to combine two brokers wash sales trades onto one 8949 (long term and short term listed) and need to report it.  Looks like you need to put both names in the same field on the summary.  Do you mail in and include the 8949 and the 1099b (two brokers) you didn't use.  Is their a proper way for this situation.?

Thanks