8949 and Schedule D - wash sales

[Boydepaname]

Hi all,

I’ve been reading up around wash sales and the documenting of disallowed losses on form 8949, and one thing I couldn’t  find a clear answer on: assuming any wash sales took place during the year, if ultimately all positions are unwound before year end, do any adjustments need to be made to either form 8949 or Schedule D?

my understanding is that any losses would be realized through the unwinding of all positions, thus nullifying the effect of the wash sale and just meaning all trades would need to be entered but nothing else.

Am I missing something?

Thanks!

[MSCO9241]

yes. you must report the wash sales because the broker will be reporting them to the IRS.  however, if you dispose of the shares causing the wash sale before year-end there's no net effect on net capital gains because the broker has increased the basis of those shares by wash sale amount.  bear in mind that the holding period of the wash sale shares includes the period the original shares were held so short-term holdings can become long-term.      

[NCperson]

that is correct; the effect of the wash sales is unwound if you close out the entire position. 

[fanfare]

your broker makes the adjustments; this is required by IRS.

Your broker report of adjusted transactions will show the CODE to put on Form 8949.

transactions with adjustments have to be detailed on Form 8949.

no subsequent actions will expunge wash sales from your reporting requirements.