Multiple 1099 form expected 2021 and wash sale rules

[certainly3]

Hello,

Hopefully I can get some insights. I use 3 different brokers for various reasons (Crypto, option level differences, user interface), meaning that by end of JAN2022, I should receive 3 different 1099s. 

I tried to avoid crossing the line that if I buy stock A in broker #1, then I wanted to avoid buying option in Broker #2, but it wasnt that easy to avoid the situation when I saw that prices would go or down upon stock price surging or plunging. 

With that in mind, what should I do in order to avoid messy wash sale rules next year? Will Turbo tax service provide and cross reference between each broker's 1099 to ensure that wash sales are disallowing the tax loss or not? 

Starting this year, I do both frequent day trading as well as call/put spread, so I want to know some damage control so I dont have to spend over night just to figure out these transaction history and wash sale rules. 

Thank you

[Mike9241]

I don't think there is any software professional or otherwise, that can handle cross-broker wash sales. it becomes a manual task that you'll have to do. the wash sales rules only apply when substantially identical securities are involved. 

 How do I know if a security is “substantially identical”?
Unfortunately, the IRS does not provide specific guidance on how to know whether a particular security is “substantially identical” to another. Therefore, investors must rely on their own judgment and the advice of professionals. In some cases, the answer can be obvious: selling shares in one company and then buying that same company’s shares within 30 days of the sale would naturally violate the Wash-Sale Rule. On the other hand, other transactions can be less clear, such as when the investor buys and sells different classes of stock from the same issuing corporation, or when they sell common shares but repurchase preferred shares.

see this link for additional information on when option activity can create wash sales.

https://fairmark.com/investment-taxation/capital-gain/wash/wash-sales-and-options/ 

[fanfare]

Although it is close to Tax Day now,

visit tradelogsoftware.com for software to have cross broker trades correlated.

They will charge you a pretty penny.

You can still request an extension of time to file.