Wash sale loss disallowed Robinhood

[techie123]

I've received 1099-B from Robinhood and there is $8000 reported as wash sale loss disallowed. I've successfully imported 1099-B into the Turbotax, but I don't see "Wash sale loss disallowed" being counted anywhere. Do I have to go to each entry and update the wash sale loss under each entry? Or is it already accounted for?

I'm not looking for any tax savings, just want to do the right thing!

[JohnB5677 · Accepted solution]

• A wash sale occurs when an investor sells or trades a security at a loss, and within 30 days before or after, buys another one that is substantially similar.
• It also happens if the individual sells the security at a loss, and their spouse or a company they control buys a substantially similar security within 30 days.
• The wash-sale rule prevents taxpayers from deducting a capital loss on the sale against the capital gain.

When the wash sale is disallowed, the amount of the loss is added to the basis of the second group of stocks that you purchased.  If those stocks were sold prior to the end of the year the wash sale would have been resolved.

It still should be reported on your 1099-B in box 1g.

[techie123]

I understand 1g. My question is, do I have to update 1g in the Turbotax? Or is it already taken care of while importing the 1099-B into the Turbotax.

[DianeW777]

You should see this accounted for on your tax return in TurboTax.  TurboTax recognizes wash sale rules and applies them according to your download/import of your statement.  What TurboTax will not know is whether all of the wash sales shown on your statement should apply. 

In other words, the wash sale rules apply when you sell and repurchase within the 60 day window, however, if you later sell the entire blocks of stock that fell into wash sale rules then the cost basis is changed by adding the unallowed loss to the cost basis. This may require an adjustment to the basis manually on your part.

You can view your tax return before you file it by following the steps below.

• TurboTax CD/Download version: Click Forms in the top right when your return is open > On the left forms tree scroll to Form 8929 or worksheets to see the adjustment for the wash sales.
• TurboTax Online version: How do I preview my TurboTax Online return before filing?

[techie123]

My 1099-B is from Robinhood and 1g is not added onto the Turbotax. So do I have to add it as individual entry against each trade?

My question is it mandatory to update 1g for each trade in Turbotax for filing taxes?

 FYI - The tax amount is the same with or without 1g numbers.

[JohnB5677]

Yes, you would enter the wash sale amount in Box 1G that was reported to you by your broker. The adjustment code for wash sales is just a " W ". 

You will use this information to complete Form 8949 or the equivalent worksheet. You are responsible for reporting all your wash sales, even if the 1099-B is incorrect or missing.

[keeblenguyen]

  Ok I have the same question. My 1099 B from Robinhood does included all Wash Sale transactions with W code. So When I use turbotax, I upload 1099B from Robinhood to turbo tax and all wash sale transaction won't report anything on Turboxtax??? I have to use form 8949 to manually enter each transaction with wash sale W code? Thank  you 

[Critter-3]

When you import any information from any source it is your responsibility to review the imported information for accuracy  and  make any corrections  as needed BEFORE you file it.  

[fanfare]

complain to your broker(s) and ask why transactions with adjustments (i.e. Code W) aren't made available to be imported separately.

Covered transactions with adjustments are  what you have to detail on Form 8949 or equivalent.

Covered transactions with no adjustments do not require Form 8949 so there is no reason to import or key in those transactions..

[a15973]

Hi - I have a slightly different question about my wash sales loss disallowed from Robinhood. Some of my transactions were flagged with (W) but I stopped trading any of those stocks in July/Aug 2021 and sold all of my positions at the time. The 1099 that I received from Robinhood still has all the wash sale loss disallowed and when I looked in detail to the final sale of those stocks, the cost basis was not calculated using the updated amount of the wash sale. Does anyone knows if Robinhood even does this calculation or I have to go and do it manually? Currently what I see is that even after all positions were sold that I have a Cost of about $130.000, Proceeds of about $100.000, wash sales for about $20.000 and only $10.000 are recognized as a loss. Considering I sold everything in July/Aug, shouldn't the wash sales have been released or added to the cost basis? Your advise would be appreciated. Thanks!

[Critter-3]

First this is a question you need to ask Robinhood  however  if you do all of your own calculations you should get the same result as they did which included the wash sale disallowances along the way.

[JohnB5677]

Your concept is correct. I'll answer the questions that I can, but you would have to contact Robinhood for individual details.

The 1099 that I received from Robinhood still has all the wash sale loss disallowed and when I looked in detail to the final sale of those stocks, the cost basis was not calculated using the updated amount of the wash sale.

The Wash sale will be carried on all of the affected sales up until the final.  A derivative like a Call or a Put will also carry the wash sale even if you sell the underlying stock position.

Does anyone know if Robinhood even does this calculation or do I have to go and do it manually?

Most brokerage houses do maintain that calculation.  You would have to talk directly to Robinhood to confirm their process.  If you wish to follow it through manually it is a daunting process.  You must check every transaction and re-calculate it.

Currently what I see is that even after all positions were sold that I have a Cost of about $130.000, Proceeds of about $100.000, wash sales for about $20.000, and only $10.000 are recognized as a loss. Considering I sold everything in July/Aug, shouldn't the wash sales have been released or added to the cost basis? 

You are correct that if you closed ALL of the positions the wash sale should have cleared itself.  It is a mathematical nightmare.  I did it only once and it was correct.

[fanfare]

If your paper consolidated 1099-B shows wash sales,

but they do not appear when you do an import, something is seriously wrong.

It is may an error in the Robinhood data, considering  other complaints I've seen here.

OR one of many bugs in TurboTax import.

[a15973]

Thank you for your quick response. I did already sent a message to Robinhood asking the same question. I did the calculation on one of the stocks that I didn't trade a lot, since it was easier... and on the first batch of stocks I sold at a profit they used all that in the calculations of the profit/loss bucket, but when I bought back same stock within the 30 days... all that was sold on a loss they flagged it as washed sales, but here I never bought back again.... and all that loss was under wash sales disallowed. So at the end... imagine I had a profit of $100 when I sold for the first time, then a loss of $1000 when I sold the last time in Jul/Aug and all this loss was flagged as wash sales. On my 1099 for that stock what I see at the end is I have $1000 as wash sales loss disallowed and $100 profit. I was just trying to understand in a situation like this, if I should manually consider the $1000 as a loss and $100 as a profit and manually net it to $900 or I'm not allowed to do that until Robinhood provides an explanation or corrects the 1099? If I understand correctly how this works the $900 loss should have been added to the cost basis of the second tranche of stock in the moment of the sale, and I see that it didn't for the simple fact that in the final calculations the (cost - proceeds = wash sales + loss/profit)... and that would make sense if I still had the stocks with me, and the wash sales would carry on... but I haven't had any of those stocks for months... and unless I manually consider the wash sales in the total equation, or I will have to pay taxes on something I didn't gain a single buck a stopped trading months ago.

[a15973]

Hi,

Really appreciate your detailed response.

If I had to calculate it manually transaction by transaction I would be doomed, but that's why I was asking if there was a way to see it directly with the totals of a specific stock. Instead of calculating for all, just to take a sample of one stock that was only traded a couple times, because this way I can immediately tell if they are even taking the wash sales loss disallowed and carry it with the cost basis, which is what I am suggesting they didn't because I grabbed a sample like this and did some basic math.

For instance, this is a similar scenario to what I see on my trading but more basic just for sake of the example. I bought 100 units of stock XXX for $3 and sold 2 months later for $4... so basically made a profit of $100... then the stock started tanking because I took profits at the top. While trying to guess the bottom I saw an entry point into that same stock below my original entry at $2.5... (this within the 30 days of selling the original pack). Like it happens a lot, sometimes not a good idea to catch a falling knife... and I saw that the stock kept tanking and I wanted to cut losses fast and sold all my position at $2... so basically I would have lost $50 (if we still use the example of buying 100 units of that stock). It passed months and I didn't touch that stock ever again. Now I receive my 1099 and I see that I have a total of cost of $550 ($300+$250) and I have a total on the proceeds of $600 ($400+$200).  In the column of the wash sale loss disallowed I have the $50 of loss from the second sale and on the column of profit/loss I have a profit of $100. Based on what I understand, unless I do it manually, Robinhood is ignoring the $50 that I lost on the second trade and I would have to pay taxes on the $100 profit. What I am suggesting is, can I manually just take the $50 loss of the second trade, from the $100 profit on the first trade and only pay taxes for the $50 net profit I had?

What I also don't know because I have not imported my transactions to Turbo taxx is that if I do it, if turbo tax software will already use the wash sales loss disallowed to do that math or completely ignore it.

Thank you in advance and I hope I am not over complicating, but if I don't figure this out I am looking at a potential payment of $60k in taxes.