Disallowed Wash Sales over Two Submitted Brokerages

[PJhiker]

Hello, I have a few questions. I have uploaded two different brokerage 1099 forms to Turbo Tax. I have Disallowed Wash Sales on both, however because I sold all the securities relating to those in early November od 2022 I believe they are not factored into my Net Gain/Loss and so far Turbo Tax is reflecting that in the totals.

However, I may also have Disallowed Wash Sales because of crossover buys and sells from the two brokerages as well because I bought a security at a loss and repurchased it in the other brokerage within 30 days. Again though, all these securities have been sold in early November 2022. My question is do I need to concern myself with these possible crossover wash sales and does Turbo Tax catch these on the 8949 from that has all the transactions when the 1099 forms from the brokerages are uploaded? Will the IRS even concern themselves with these? I have ton of transactions and am hopeful I don't need to go through this and report any crossover wash sales. It does not seem like it would matter.

[Mike9241]

crossover wash sales - maybe.  wash sales can convert short-term items to long-term because holding periods tack on from the shares sold to the shares acquired that caused the wash sale.  the other issue is if you transfer securities from one broker to another they are using the proper tax basis.  sometimes they will use the value on the date of the transfer as the tax basis which would be wrong in about 100% of those cases.

[PJhiker]

I never transferred holdings to another brokerage. I just probably have about 5 wash sales that are caused from buying a Security at a loss in one brokerage and then repurchasing it in another brokerage. I would think because I sold all these securities prior to the end of the year in November I am good? I know because I sold them the disallowed wash sales are realized as legit losses for the year and I think what I'm asking is because of that don't the crossover wash sales become realized and as a result mean I don't really need to worry about manually figuring them out and reporting them to the IRS since the realized Gain/Loss would be the same either way?

[fanfare]

@Mike9241 

 I covered this topic in his other thread.

Please help him out.

I was not able to allay his concerns.

@PJhiker 

You worry too much. you need to meditate or take a stress pill.

[JohnB5677 · Accepted solution]

If you sold 100% of all of your holdings in the underlying Wash Sale stock in November, you should be Okay regardless of what broker you used.  The reported Wash Sales are not recorded directly on your tax return.  Instead, the cost basis of the underlying stock is increased.  The result is that when you finally sell the underlying stock it will be a bigger loss or a smaller gain.

Provided all of the stock was sold in November, you will not have to be concerned with figuring out the cost basis between multiple brokers.

A wash sale occurs when an investor closes out a position at a loss and buys the same security (or a substantially similar one) within the 61-day wash sale period.  Wash sale rules are designed to prevent investors from creating a deductible loss for the purpose of offsetting gains with only a short interruption in owning the security.

[PJhiker]

You might be right, but I have had a lot of hard times recently with both of my parents passing away and dealing with a brother who let's just say has a lot of problems. It's been challenging and presented mistakes financially and challenges in that area, so I am really just trying to make sure this does not come back to me and would rather error on the side of overthinking and worrying now. I appreciate everyone's feedback and time on this. It's really meant a lot and I am grateful

[PJhiker]

Thank you John. I appreciate your feedback very much. OK, so it appears that if I just upload my two brokerage 1099-B forms that also update the 8949 automatically with the transactions I am fine this year right? It is showing my Net Gain/Loss on Turbo Tax as it appears on the 1099-B forms, so it looks like it checks out. I was making sure the IRS would not expect me to manually adjust for wash sales that result from buying one security in one brokerage and selling at a loss and then repurchasing in the other within 30 days. I was wondering if they would look at that and/or reject my filing because of it. But, again all the securities in both accounts were sold prior in early November. 

[PJhiker]

So I just did my GFs taxes. Not totally done yet but when we did a review on Turbo Tax it has find the "purchase" date for certain transactions before we could move on with her filing. it was like 11 transactions. All of them end up being "various" as the answer. What does that mean and am I going to have to do that for every wash sale I had with Turbo Tax?

[GeorgeM777]

That depends.  The term "various" in the section on a tax return that relates to security transactions usually means that a security was purchased/sold on various dates.  You might see the term various on Schedule D where you can report transactions as a summary rather than as individual transactions.  However, if you designate certain transactions as long term, make sure the sale dates are all more than one year from the date of purchase, even if you use various to describe the purchase dates. 

You need to be more specific with dates when it comes to wash sales.  As discussed in previous posts, the wash sale period is 30 days before, and 30 days after the sale of the security in question.  That is, if you sell a security at a loss, and then you buy the same, or similar security, with that 61-day window, you will trigger the wash sale rule.  The wash sale, as you have discussed, applies across all of your accounts wherever they are held.  

In your second to last post, you described a wash sale.  That is buying a security and then selling that same security at a loss in one account, and then in a second account, re-purchasing that same security.  That is a wash sale and yes, your loss will be disallowed.  You need to make the appropriate adjustment in TurboTax to remove that transaction, and then add that disallowed loss to the cost of the security you purchased in your second account.   Now, if you want to sell that security that was purchased in the second account, and not trigger the wash sale rule, you need to wait at least 30 days, because of the wash sale window period.   You can always sell the security at a profit as selling at a profit does not trigger the wash sale rule. 

If you prefer, you can post the dates of your purchases and sales, and subsequent repurchases--or perhaps a few of them--and we can review them to determine whether the wash sale rule has been triggered.  

@PJhiker 

[PJhiker]

OK, but my questions is and others have led me to believe that all of this is kind of irrelevant if all these securities were sold off in 200 and in November. I have been led to believe I do not need to worry about adjustments on all of these because all of the securities were sold in both brokerages.

[RobertB4444]

If a disallowed wash sale amount was reported to you on your form 1099-B then you can't disregard it.  It needs to be entered as an additional taxable amount.

@PJhiker 

[PJhiker]

Yeah, but others have told me the Net Gain/Loss that is currently calculated after uploading both brokerage 1099-Bs to Turbo tax. And, other experts and many others have stated since I closed all securities in Nov ember 2022 that had disallowed wash sales that all those losses are realized losses and my current Net Gain/Loss as calculated is correct. So my questions is why do I have to manually do anything with the transactions on the 8949 form in Turbo Tax?

[fanfare]

I covered all this on your previous question thread, 

let's not rehash it or make others rehash it.

where does "various" come from?

do you see that on your consolidated 1099-B?

usually "various" is something you enter yourself for "date acquired".

That's the only place it is allowed.

 "So my questions is why do I have to manually do anything with the transactions on the 8949 form in Turbo Tax?" you don't have to do anything.

@PJhiker 

[PJhiker]

Thanks for getting back to me. I did my GFs yesterday and when we did a review for her taxes after uploading her brokerage account it listed roughly 10 transactions to "review" before being able to move forward. On each one I had to manually enter the date acquired field as "various" on Turbo tax as it was listed under the date acquired field on the brokerage 1099 form. I am trying to gain clarity on what exactly "various" means and if I will need to do this a lot when it comes to review mine? Also, does various mean the security was purchased more than once on different dates? Like it was dollar cost averaged into and then sold? Is that why there is no specific date and the "various" is included on the 1099-B and must bantered manually on Turbo Tax?

[PJhiker]

Hopefully I explained this correctly. Yes, I see "various" as an entry for transactions on the "date acquired" area on the consolidated 1099-B form AND I see that "various" term as an option on Turbo Tax that I MUST manually enter to move forward with filing on those transactions. My question to understand things better is what does that refer to and I am thinking it means the transactions in question were dollar cost averaged into and not with one specific date before they were sold. Is that a correct analysis of it?