How should I claim stock wash sale loss disallowed amount back in following year?

[TomYoung]

Well there you go!

[icnewer]

It's still hard to fully avoid such cases happen... sometimes you purchased 1 stock where you thought it's going to be good(rising in the future) but later there could be some accident happened to the stock/company that you were not aware of, so you sold it out; after a while, maybe you feel that accident caused stock price overreacted that stock price is still good to purchase for long run, thus you purchased it again. I feel it will be kind of normal and no way to fully avoid thus we have to handle this wash-sale case properly otherwise IRS will only see my gain thus charge me the tax $ but ignored my loss happened which to me is not fair for sure.

[aa119]

I have been using summary tab and filling my taxes for few years. I always thought Robinhood's 1099 will calculate properly and always filled looking in to summary tab.. Thankfully i don't trade with any other broker.. so will this cause an issue for me in any way ?

Does Robinhood calculate it correctly now for 2019 & 2020 ?

QUESTION:

If I had a wash sale loss in a fiscal year, ideally the disallowed loss should be added to cost basis of the same stock and when it is sold for good or 30+ days.. then we can realize the loss.

My question: when we file tax we look at the summary on 1099 and fill the amount. Assuming the cost basis is automatically updated by Robinhood for following year. is that right?

Example:

In June 2018 bought 1 share of company (XYZ) for $15, next day sold for $10, following day bought again for 13$.

2018 1099 shows:

Wash sale disallowed: $5

App shows cost basis of share is $13

For me Cost basis of the share is $18

In Feb2019 I sold the share(XYZ) for $15

2019 1099 Should be what, will it should me a loss of $3 based on $18 cost basis or will it show me a profit of +$2

option1) 15-18 net loss on share (xyz) = -$3

or

option2) 15-13: net gain on the share = +$2

[Mike9241]

does Robinhood have a phone number?  if so call them.  they are the only ones who can answer your question.  it may be that the 1099 summary just lists purchases and sales and is not an official form.  1099-B is the official one and I doubt that Robinhood has issued it this early.  on the official form, the IRS requires reporting of wash sales and adjustment of cost so the correct gain is reported when the shares creating the was sale are sold.

[fanfare]

TD Ameritrade just issued consolidated 1099-B yesterday.

All wash sales are marked with "w" or "wash sale"

If Robinhood is issuing you an incorrect 1099-B, maybe you need a new broker.

As mentioned before, IRS requires your broker to track and detail your wash sales.

Make sure you're looking at your "consolidated 1099-B for 2020."

[icnewer]

Basically, the conclusion is: if you have multi-broker acct and you happened to trade same ticker across multi broker, you should calculate the cost correctly (which will gain you on the cost basis) by considering the wash sale by your own, either using some tool like TradeLog or maybe Excel can do it too (I guess if you are trading 200 or less annually for that ticker)?

So eventually what your reported on your tax return will not be same as brokers' 1099B summary, so it's normal and fine for multi-brokers acct & trading same ticker among different brokers. Is it a correct statement?

[Mike9241]

the broker adjusts the basis of the sales causing the wash sale.  when you sell them, unless you cause another wash sale, your gain or wash will reflect the disallowed loss. 

[vicky12]

Nestlen, I was in the similar situation as you. I can't see the next purchase proceed updated as per robin-hood trade statements and 1099B followed by wash sale loss disallowed.

This is the issue with 2019, 2020 tax returns, I had to bear the losses. Robinhood takes forever to reply to emails and when they reply its mostly irrelevant. Not sure whether they can fix this or update me if I can adjust from my side. Were you happen to adjust cost basis from your side. If so, how did you adjust it?

Appreciate your help.

[ReneeM7122]

You are correct, Robin Hood is responsible for adjusting the cost basis of the replacement stock and the adjusted basis that's reported on your 1099-B when you have a disallowed wash sale.  Because of this, TurboTax will calculate a loss for you to bear by default, since it doesn't have information about the replacement stock. 

To manually adjust the cost basis of disallowed stock, enter the transaction exactly as it appears on the 1099-B.  You'll see a bar at the bottom of the screen that says I'll enter additional info on my own.  Then look for the option to correct the cost basis and make the adjustment.

@vicky12

[josephbenedict]

Renee,

You'd manually enter the disallowed loss as cost basis on the subsequent shares sold and not as basis on the wash sale shares, correct?

[ReneeM7122]

Yes, you are correct.  You should manually enter the disallowed loss as cost basis on the subsequent shares sold and not as basis on the wash sale shares.  Though the brokerage didn't make the adjustment, the taxpayer is responsible to report income correctly.

@josephbenedict

[pentazhang]

Tom, I think you are right. I am working on my 2020 tax as a trader and looked into the same problem. I used Charles Schwab and in 1099B the "washed sale disallowed" amount did add to the cost of the replacement shares. One can check this by comparing each transaction where washed sale disallowed appears with a number in 1099B with trade monthly statement the broker provided. I am not sure about other brokers but I believe they should run on similar algorithm. Anyway, worth to test using the comparison I mentioned. Simply excluding the washed sale disallowed amount without understanding is not a proper way. Hope this can help to clarify...   

[pentazhang]

Anybody knows how to report the day trading ordinary gains and losses on Part II of Form 4797, Sales of Business Property if elected section 475(f) Mark to Market? IRS Topic No. 429 says use form 4797 Part II. There is a table on line10 of Part II to include gains and losses. If there are hundreds of trades, should list them one by one or just put a total?  If list one by one, how to handle hundreds of trades? Also, does it only need to fill out line 10 to 18 and leave rest emply if only report ordinary gains and losses?  

[DianeW777]

Yes, you do need to file Form 1040, which will include Form 4797 and Schedule C. As referenced the following link is here for convenience:

• IRS Topic 429-Traders in Securities
• This provides the information to enter on your statement that is attached to the return.  Simply stated you can use the following statement:
  •  Statement of the mark-to-market election under Internal Revenue Code section 475(f) for a trader in securities. 

You must use TurboTax CD/Download version (not TurboTax Online) to complete your tax return and the information posted here for your convenience.

• You will manually add a Form 4797 to your tax return, and enter your net total gain / loss in Part II of Form 4797, using the TurboTax smart worksheet.
  • Switch to Forms (upper right) > Type 4797 > Press Enter > Select the forms and worksheets for Form 4797
• Traders report their business expenses on Schedule C. Commissions and other costs of acquiring or disposing of securities aren't deductible but must be used to figure gain or loss upon disposition of the securities.

[Diane3]

I traded options and believe had several wash sales. My 1099-B does not indicate that. Can you please tell me to which lot I carryover my disallowed losses to?

XYZ

purchased   quantity   sold      gain/loss

6/12                1              6/12      $39

various            2             6/19      $-119

6/23                1              6/23      $4

6/24                1              6/24      $9

6/24                1              6/26      $-14

6/29                1              6/30      $15

all sold, never repurchased again