Wash sale loss disallowed Robinhood

[a15973]

Thank you for your response.

I have not yet started the import of documents to Turbo tax because I still need to collect a lot of documents but when I saw the 1099 from Robinhood my alarms rang because overall I had a profit of about 10k in stocks last year and with wash sales disallowed it's considering almost only the profits I made which goes to $160k. So unless I'm able to prove that I have not traded any of those stocks again and the wash sales loss disallowed should have already been lifted... I am looking at paying around $60k in taxes... for a profit of $10k. So this is how I know the calculations HAVE to be wrong, because I know the money I have on that account and it's not $160k.

I get that I would be screwed this year if I still had the stocks and potentially have that loss accounted for on the next year when I would sell the stocks, but that's not the case... if I don't have those stocks anymore there is nothing to carry any longer and the math needs to be resolved on the year that the final sale took place even if I have to do it manually.

I am just trying to confirm with some of the experts in the matter, that in the situation I have that I have not traded anything for months before the year end and I don't have a single of those stocks since August, how can I account for the loss I had.

Thanks

[fanfare]

Pick any wash sale on your form.

Then find the earliest buy order within the +/- 30-day window that triggered the wash sale,

You should find the cost showing for that purchase to be higher than your trade price x shares.

Is so, you can see that Robinhood is accounting for wash sales correctly.

[a15973]

If that's the case, did you see the example I shared when doing the sum of all transactions bought and sold of a specific stock? It shows perfectly that my cost was for example $500, proceed $400, but they still have me pay like $200 in profit, when in reality I had a loss of $100. That would be ok if I kept the stocks, but I didn't and sold all my positions in July/Aug. At the end of it, all wash sales loss disallowed should have been cleared and I ultimately should be recognizing the final loss of $100, not the profit of $200 I had in my first sale of that stock.

[fanfare]

"or I will have to pay taxes on something I didn't gain a single buck a stopped trading months ago."

Either Robinhood issues a corrected 1099-B, or you file with your own correct numbers.

One way to do that is with adjustment code "B", incorrect basis on the 1099.

TurboTax supports that.

Then you move your accounts to a different broker.

[a15973]

Awsome! Just wanted to guarantee that I was able to manually update the numbers on 1099 if I had confirmation the math was not being done correctly. Thanks!

[RS07]

I have exactly same issue in my Form 1099 provided by Robinhood. I also had sold all my stocks last year and didn't purchase same or any similar stock in 30 days of sale.

In my case, I had an actual loss of $10K, Which is calculated same by Robinhood (by calculating using my original cost-basis), but at the same time it showed me the Wash Sale loss disallowed as $8K. That essentially means, I can only show a loss of $2K, instead of $10K actual loss.

I reached out to Robinhood with this problem and they ask me to send the details. I'll share them the transaction details and will see what they respond. 

I'll be interested to know if you also get any answer from them or any other information or details from any other means on how to resolve this issue.

[ira2021]

I am having a slightly different situation and am not able to comprehend why should wash sale loss apply to me. Here is my sequence of events:

(1) I bought a total of 1000 units of a stock over different days in the month of Feb last year. Total cost for all those units lets say is $20K.
(2) All of these 1000 units were sold in March at $13K, thereby incurring a loss of $7K
(3) Later in the month of March, I repurchased X units as the prices dropped, at a cost of $20K, and this transaction was within 30days of the sale. I believe this is considered a wash sale loss.
(4) These X units are still unsold and continue to be part of my portfolio even in 2022. So, when I eventually sell them, let's say this year in 2022, their cost basis should be incremented from $20K to $27K, as the loss which was $7K. This is how I understand the wash sale loss works.

But I notice that in my 1099-B from robinhood for the year 2021, my cost basis (box 1e) for this stock is showing as $23K, which is higher than my actual cost, and hence my wash sale loss is also showing up as $10K (cost-proceeds, so $23K-$13K=$10K)  .

So my questions,

(A) Can someone explain why is my cost basis higher in 1099-B? How was $23K computed anyway?

(B) When I import the 1099-B into Turbotax, Should I adjust the cost basis from $23K to $20K in effect adjusting the wash sale loss from $10K to $7K ? Remember,  I have not yet sold the repurchased lot.

Thanks in advance.

[fanfare]

@

What is X ??

in your example, if X is less than 1000,

your disallowed loss is the loss incurred on the earliest X shares in the time window.

[ira2021]

So X in my example is overall 1200....first repurchase was 800 and then I purchased 400 more. Can you please explain again in this context what does this imply: "your disallowed loss is the loss incurred on the earliest X shares in the time window." 

Thanks!

[fanfare]

1,200 is not less than 1,000

[ira2021]

Correct. Overall, I repurchased more units in the second lot last year, after I sold the first lot completely. So since X is more than 1000, I am sorry but I still fail to understand why is 1099-B showing higher cost basis of $23K? Is it correct or does it need to be fixed by Robinhood? Or can I update the itemized cost basis for this particular stock in Turbotax? Sorry, I am new to all this.

[ira2021]

@DianeW777appreciate if you can throw your insights here as well.

I noticed you commented on a similar topic last year here: https://ttlc.intuit.com/community/business-taxes/discussion/where-do-i-enter-wash-sale-loss-disallow...

But I feel my situation is somewhat different.

[fanfare]

It sounds like an incorrect 1099-B, from what you said.

BUT

an expert would have to examine the entire consolidated 1099-B to confirm this.

[ira2021]

hmm ok, but Robinhood is denying that it is incorrect. They sent me a detailed ledger and asked me to work with tax adviser. What are my options?

[a15973]

I got Robinhood response a few days ago and not really a lot of help. Like you they as asking for further details on the calculation of the washed sales, but they missed my point that the calculation of the washed sales is correct, but once all stocks were sold all those should have been unflagged. This is what they responded:

"After reviewing your 1099, the document released appears to be in good order including the wash sale figures. 

A disallowed wash sale loss occurs when a position is closed at a loss and shares, or options, of the same security, or substantially identical securities, are purchased within 30 days before or after the day of the sale.

When a disallowed wash sale occurs, the loss is added to the cost basis of the replacement lot and the holding period is subtracted from the acquisition date of the replacement lot, to make a new holding date. Note that this can cause the term to change from short term to long term in some cases. 

You can find a list of your wash sales in box 1G of your 1099 tax document. 

For more information about wash sales, check out our Help Center.

If you feel there is a transaction that is subject to a wash sale that should not be which is causing incorrect figures on your 1099, please provide a description of the transaction or a screenshot so I can further investigate. 

We’re not authorized to give tax advice, so for specific questions about your 1099 tax document, including how to file it or how to calculate your cost basis and wash sales, we recommend speaking with a tax professional."

The issue that I keep insisting I have is that overall I had a loss of $75k and out of those only $6k are being considered a loss, the rest is being flagged as washed sales when I don't have any of those stocks since July. In the overall sum of the cost vs. proceed, you can see clearly that the cost of the stocks was $75k higher than the proceeds, so it shouldn't matter that if at some point wash sales were flagged, what it should matter is that at the end of the year, and after not trading any of those stocks for months, the loss should be accounted for because I no longer have those stocks to be able to consider any future cost and benefit from the sale.

(in case someone thinks I'm the worst investor on hearth to have a loss of $75k last year when everything was going up, I moved all my assets to crypto and made 3 times that the rest of the year... lol).