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

[TomYoung]

I'm not sure anybody should be editing anything without a complete understanding of what's going on, without being able to say definitely "the broker's in error."  The issue of "covered" securities has been around for quite a few years now and I'm willing to bet that most brokers - I'd think ESPECIALLY brokers that encourage day trading - have their systems for tracking this stuff well shaken out.

[samd1]

I just confirmed with TD ameritrade that Brokers do not remove wash sales from 1099b when the security is sold disposed and never trades in the last two month of the year . It is up to the prudent investor/trader to remove these wash sales so the loss can be used to offset the gain from another trades. I have their email. I will be attaching it here

[samd1]

<a rel="nofollow" target="_blank" href="https://ttlc.intuit.com/questions/4607000-how-do-i-edit-wash-sales-adjustment-i-want-to-remove-all-w...>

[fanfare]

of course, the broker is not going to remove wash sales from the report, under any circumstances.
Your contentions is that identical shares purchased that triggered a wash sale have not  had their basis adjusted correctly.
According to the IRS pubs, It is the earliest identical shares that will be adjusted, not necessarily the recent ones that triggered a wash. it's hard to figure the rule that TD Ameritrade uses. I tried last year but gave up.

[TomYoung]

"I just confirmed with TD ameritrade that Brokers do not remove wash sales from 1099b when the security is sold disposed and never trades in the last two month of the year.

Yep, that's exactly what we've been trying to tell you.  The wash sale stays there, PROPERLY REPORTED, because the basis of that "last sale" has been grossed up.  So to remove the wash sale from the 1099-B would UNDERSTATE your income.  That "prudent investor/trader" nonsense is coming from your fevered imagination.  If brokers were routinely preparing 1099-Bs that tended to understate the income of all those "prudent investor/trader" folks - not as tuned in as you - don't you think the IRS might be interested in that?
 
If you encounter a wash sale situation for a stock pays dividends monthly and you're reinvesting those dividends you typically will see the adjustment in your oldest lot.  FIFO and all that.

[samd1]

TomOld you are absolutely wrong. I disrespectfully disagree w you. You are not a broker but defending the broker. Yet the broker admitted that once the wash sale is triggered it is never removed  which by the IRS rule is wrong. I am by the way much more sophisticated then what you think TomOld . I have MTM accounting and trader status and i report my trades on 4797 form using Tradelog software. I know probably you never heard of that. I have tow argument to prove you wrong. The 1099B has different section. one section is called wash sale disallowed. What is the point of having such a section if I have zero positions and not traded anything nov and dec if it is already factored in the cost basis?  TD ameritrade will sum all the  losses from all the trades that involved a wash sale and put that there. so you are wrong.  I think you are not knowledgeable  and should be removed from Turbotax. . two years ago I traded one ticker SPY back and forth the whole year. The gain from wining trades was $20000 and loses were $15000. Net gain is only $5000. My tax liability is around $1500. However 1099B listed disallowed wash sale $15000. All my losses were wash sales. That can not be right. when i imported to turbo tax. Tax liability was $5000. Almost more than what I made. All i had to do is delete the wash sale disallowed. My other point to prove you wrong 1099B does not have wash sale allowed and wash sale disallowed. Everything is disallowed. All traders need to fix the 1099B by broker and remove the wash sales bc the Broker would not remove them. Wash sales reported on 1099B have nothing to do with cost basis calculation. It is just the broker listing all the losses from positions that triggered a wash sale alert.  Net gain loss = Proceeds - cost basis. Wash sale amounts are not factored at all and not included in the calculation. It is only the loss that is identified as a wash sale and listed separately on 1099B. Per IRS and Broker these wash sales should not be counted for if the position is closed and the security is never traded. Whoever is reading this trust me. Run the numbers yourself.

[fanfare]

there are two different types of reporting
Professional trader MTM accounting
Investor activity on Schedule D.

Let's not confuse the two.
for MTM accounting, Wash sales are moot
Also for MTM accounting, Tradelog software is not necessary so now you've got me confused along with you.

[Update: at the time of posting I was definitely confused due to misunderstanding the rules.]

[TomYoung]

Oh My!

[samd1]

The broker needs to stop the stupidity and remove the wash sales disallowed from the 1099B when the security is sold, position is closed and the security is never traded in the last 2 months of the year. Go educate yourself. This has nothing to do with the cost basis. The wash sale reported on 1099B is reported separately from anything else. Net gain/loss= Proceeds - cost basis. The wash sale is not part of the calculation. It is every time a trade triggers a wash sale. It is attached W next to that trade and all the losses are added to a separate column called wash sale column. These wash sales then get added up and the sum is reported on 1099B as disallowed. When importing the 1099B to turbo tax. Turbo tax does not allow these losses to offset gains made on other trades. Inflating my tax liability. I have go and manually remove all the wash sales from all the trades knowing that I closed the positions and i should use that loss to offset the gains and reduce my tax liability. I have to do extra work just bc TD people and turbotax people are too dumb to remove these wash sales from 1099B. Again these reported wash sales amounts on 1099B have nothing to do with cost basis calculations. Cost basis is nothing but average price of the security over period of time. Gains and losses utilizing cost basis are reported separate than wash sales.  Wash sale should only be reported on 1099B if I still have a position open in that security or if i close the position in December.

[icnewer]

hi @samd1 , thanks for all those sharing. Following your comments, we just need to adjust "cost basis" to include those washsale disallowed loss into the cost, however Turbotax asked to upload the 1099-B statement into IRS as the verification. Say we changed the cost basis into include the washsale loss (which happened last year of 2018), then it will be mismatch vs. 1099-B statement from the brokerage, will this trigger the audit by IRS? what's your comment on this case please?

[fanfare]

When sold at a loss, it's quite possible your triggering purchase of identical shares can become wash sale shares as well.

In that case your loss is denied again. and the basis again adjusts on some other identical shares.

@icnewer  Your best bet is to report what the broker gives on your 1099-B since that's what the IRS sees.
That's the whole point of going to covered transactions. aka Sales Category A,D.

[mai3cissie]

I'm using TradeLog this year precisely because of wash sales and accurate reporting.  For me the problem is I have 5 brokers I trade with ... so it's always possible that I'll buy and sale the same ticker symbol across brokers ... best I can tell the IRS requires this to be handled by you the taxpayer so ... Hello, import into TradeLog and generate the details with all the wash sales done for you!

Not the funnest thing I've ever done but I feel like I'm much closer to 'right' than any other way.

[Anonymous]

do you have a question?

[TomYoung]

"For me the problem is I have 5 brokers I trade with ... so it's always possible that I'll buy and sale the same ticker symbol across brokers ... best I can tell the IRS requires this to be handled by you the taxpayer so.

That's exactly right.  TurboTax can't deal with this situation so you must.

If you're an active trader with 5 brokers and lots of volume with each one of them it seems like you'd be a candidate for a program into which you dump all your trades for the year and the program finds all the wash sales for you that exist across brokers... if such a program exits.

[fanfare]

" if such a program exits." 

That's exactly the service offered by TradeLog  ( www.tradelogsoftware.com )

For reasons not to be gone over, I have two accounts at one broker. Both are regular investment accounts.

I try to avoid trading the same stock in both accounts in the same time window to keep sane at tax time.

If trading the same stock in five brokerages, that's pretty compulsive IMHO.