WASH SALE STOCKS

[JohnB5677]

You will have to mail a copy of your transaction summary to the IRS.  TurboTax will produce a Form 8453. You print Form 8453 and attach the summary to it. Mailing instructions will be included.

[ss243]

can you please reply with the address   i wasnt able to find it

[PattiF]

Here is a link to Form 8453 with the mailing instructions on the second page.

@ss243

[ss243]

thank you for this information.  Your reps are not familiar with this as no one I spoke to at TT knew this information.  It would be helpful that the TT programs provided this information and explained how 8453-FE and 8453 are different and what they are used for

[ss243]

I could not find 8453 only 8453-FE in the program

[PatriciaV]

@ss243 Please clarify if you are filing a personal Form 1040 tax return or Form 1041 for an Estate or Trust. Form 8453-FE is the version for an e-filed Estate/Trust return.

[ss243]

I filed a trust return 1041.  I filed 8453-fe electronically with the tax return and this morning I mailed the brokerage statements to the IRS with form 8453.   I had summarized my transactions so it is my understanding that I needed to send the 1099s from the brokerage firms to the IRS.  I was not able to find the form 8453 in the TT forms nor any reference to that form in your program.   I had no idea that there were two different 8453 forms one FE and one without.    Some one from TT eventually sent me the link to the form 8453 so I was able to send the statements to the IRS with the proper form to a new address in Austin, TX.  It would be extremely helpful next year for TT to let us file from 8453 and the brokerage statements electronically along with the tax return

[amanmarwah]

HELLO ALL NEED HELP ASAP, 

I am looking at my etrade WASH SALE LOSS DISALLOWED section and it looks wrong.  For example I was buying and selling the same stock 40-50 times during the year, when I would take a wash sale loss disallowed it would not be added to the cost basis the next time I bought the stock like 40 days later, the cost basis showing on the 1099 is just the market price * shares + commission, I don't see for any of the buys I did all year where the wash share loss from prior sale was carried over to new purchase.  What should I do?

[RobertB4444]

@amanmarwah  You need to contact your broker.  If you believe that the wash sale loss amount is incorrect you need to contact them to find out how they calculated it.  If you can find an error there they should issue you a corrected 1099-B.  The only other option is to change the amount that is on the 1099-B to what you believe it should be and that is not recommended as it will not match the numbers on the form received by the IRS.

[aweeva]

Etrade doesn't adjust the cost basis for wash sales on 1099. The rules for wash sales on 1099s is completely different than the rules for wash sales on your taxes. They simply assume that its all disallowed if they qualify it as a wash sale. 

Etrade could automatically adjust the cost basis for you, but they dont.

Turbotax could automatically adjust the cost basis if they have multiple years of 1099s in their system since all of your trades are in their system but they choose not to 

[amanmarwah]

Can you explain the rule for wash rules on 1099 is different than for taxes 

[GeorgeM777]

The wash sale rule disallows a loss on the sale of a security.  Generally, for many taxpayers, it gets triggered when you sell a security at a loss and then re-purchase the same security, or a similar security, within 30 days.  If that happens, the loss that you realized when you sold the security gets added back to the cost basis of the purchase that triggered the wash sale.  If you want to realize the loss, then don't re-purchase the same or similar security within 30 days after a sale that results in a loss.

Does your 1099-B reflect whether a particular trade was a wash sale?  Remember, the wash sale only disallows losses.  In effect, it increases gains because when you disallow losses, that tends to increase gains.  And it only applies to losses.  If you had a gain and then later repurchased the same or similar security, no matter when you made your purchase, the wash sale rule does not apply.   

@amanmarwah

[aweeva]

Hi,

The options contract expired in 3/2021. So it would be impossible for the cost basis to roll forward to another instrument (and it indeed did not roll forward).

Why would anyone pay regular income rate on the destruction of capital? That makes no sense at all.

Just because you can't deduct the loss doesn't mean that it was a gain. That is insane.

[DianeW777]

Let me try to explain how it works. The reason there would be more gain is that in the overall picture of stocks sold during the year, assuming there is gain, and a wash sale rule occurs, the loss on the stock involved in the wash sale is not allowed to offset gain on other stock sales.

The broker always knows when a wash sale occurs, they don't always know when it ends. For this reason the investor must track the wash sale disallowed losses.  They must increase the basis in the similar stock bought within the 60 day window (purchase 30 days before or 30 days after the sale of the same stock at a loss). Once all of the same stock is sold without a repurchase the full loss is allowed if that is the result on the final sale.

@aweeva

[aweeva]

Can we agree on the basic premise that numbers can increase, decrease, or stay the same?

Based upon that premise, if there is a loss of lets just say $8000 that is disallowed:

I wouldn't expect that my taxable income would increase by $8000 and I wouldn't expect my taxable income would decrease by $8000. My taxable income shouldn't change.

Why would a non-deductible loss be considered a gain? There are all sorts of tax credits that I can't take because of various reasons (like I don't have kids) but just because I can't apply those tax credits doesn't make my AGI increase.

This makes even less sense on options contracts that have been expired for a year as there is no possibility that in the future I will be able to claim that loss.