Wash sale question

[sean99]

this is my first question on this portal. Any help will be appreciated. 

Here is my question. I have a Fidelity brokerage account. In year 2020, I had a few sell transactions on April 6 (200 shares), April 7(200 shares) and April 22 (200 shares). I had a buy on April 21 (200 shares). This April 21 transaction triggered wash sale for those transactions on April 6 and April 7 as well as April 22. I looked at the shares sold on April 22, I actually specified the shares to be those purchased from April 21, but in the Supplemental Stock Plan Lot Detail, those sold on April 22 had some short term transactions which have date of acquisition listed from dates I never made any purchase; ans some long term transactions also have data of acquisition listed from dates I didn't make any purchase. All those 178 shares with weird acquisition dates carried some amount of Wash Sale Loss Disallowed and the same loss amount listed under Adjusted Gain/Loss column. Out of the 200 shares sold on April 22, only 22 shares listed Date of Acquisition on April 21. And these 22 share had $0 Wash Sale Disallowed, but showed some gain under the Adjusted Gain/Loss column. I added all the 200 shares' Adjusted Cost or Other Basis(z), the total Cost shows higher than the purchase price I paid on April 21. But the amount higher is less than the wash sale loss on April 6 or on April 7. I thought for wash sale, if I have a loss on April 6, say for $1000, I can add this $1000 for a future purchase cost basis. Can someone tell me if my wash sale loss would automatically be added by the broker? Do I need to do some additional adjustments? By the way, I used Turbotax import to get the forms from Fidelity. Thank you! 

[Mike9241]

this could be wrong because you did not provide full details making it impossible to determine what actually took place

you sold 600 but only bought 200 which means that you must have been holding at least 400 shares before the first sale

you sold 200 on 4/6. the gain/loss would be determined by reference to the first 200 shares you acquired

however, it would seem these were acquired at different times and at had different tax basis so some shares could have been sold at a gain while others at a loss

you sold 200 on 4/7. the gain/loss would be determined by reference to the second 200 shares you acquired

however, it would seem these were acquired at different times and at had different tax basis so some shares could have been sold at a gain while others were sold at a loss

on 4/21 you bought 200 shares this could trigger a wash sale for the first 200 you sold. however, only for those shares that were sold at a loss. so it's possible only 178 shares had a loss

on 4/22 you sold the 200 bought on 4/21. those shares, to the extent needed, would have had the disallowed wash sale loss add prorata to the same number of shares sold at a loss

US brokers are required to adjust basis for wash sales.

further clarification talk to the broker.        they do at times screw up.

[sean99]

Thank you Mike. Your answer made a lot of sense when I went back to look at those sales again. A few more generic questions -

1. For the amount listed as wash sale disallowed loss, they will be added somewhere later when I purchase the same stock. Correct? Say the total disallowed loss is $1000, then this $1000 will be added in the future cost basis. 

2. If I have some transactions with a total share of 100 wash sale at loss total of $1000, say in an easy way to calculate, each share I lost $10. In the future, if I buy only 50 shares in the same year. Will $500 (50 shares' loss) be added to the new purchase 50 shares' cost basis? Or the whole $1000 be added to the new purchase's cost basis? 

3. In the year where wash sale occurred, if I didn't have any more transactions, will the loss be carried to the following year? 

Thanks again for your kind answers. 

[fanfare]

a)  It is the triggering transaction that gets adjusted. That happens immediately.

According to IRS rules, how much it is adjusted is figured starting with the earliest SELL(s) in the +/- thirty day window that is(are) being disallowed.

b)  It is possible for triggering transactions to also turn into wash sales due to subsequent triggering transactions.

Lucky for you the broker is required to track all this, so why worry about it ?

[sean99]

Thank you fanfare for your answer. I was just to trying to figure out where have the disallowed loss been added to the cost basis. I thought I need to do something myself. But anyway, your comment sounded I should trust the Fidelity and not worry about it. I had some back and forth sell, purchase in that few months when we first entered the pandemic. The back and forth made the transactions very complicated I guess, e.g. wash sale after a wash sale. I don't think I will run into the same situation anymore. Just to learn something. My question I asked, e.g. if I sell 100 shares at $50 a share, $10/share loss. After a week, I purchase 20 shares at $30 a share. Will this 20 share purchase trigger the entire 100 share of sell loss a wash sale? Or only 20 shares in that 100 share considered wash sale? 

[fanfare]

if the number of shares bought is fewer than the number of shares sold, then only that smaller number of sold shares have their loss disallowed.

[sean99]

Thanks again. I learned a lot. About wash sale, in the following example, what did I lose? 

3/1 buy 100 shares of A stock at $20 a share

5/1 sell the above 100 shares at $10 a share, now I have total loss of $1000

5/15 buy 100 share of A stock at $8 a share. In this step triggered wash sale. 

6/1 sell the 100 share of A stock at $25. When file tax return, the cost basis is $8 + $10, is it correct? If so, I made $700 as short term gain. 

If I don't do anything after 3/1 and hold the 100 shares until 6/1. Sell them all, I make $500 profit. in this example, what is the punishment to the wash sale? 

[RaifH]

Everything you said is correct. $200 of the loss occurred when you did not own the stock, so you aren't being punished by the wash sale. 

You spent $2,000

You received $1,000 on the sale so now you're in the hole $1,000

You repurchase for $800 so now you're down $1,800

You sell for $2,500 so you are now up $700, which is the same as the gain recognized on your taxes.