Wash sale or not? How to report

Forum|Forum|6 years ago
April 7, 2020
1 reply
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I'm not sure if the wash sale rule applies. Here's my situation:

5/23/2019 and earlier - "bought" (RSU vest) many shares and did not sell most of them; no activity until next item
8/21/2019 "bought" 675 shares (RSU vest), automatically selling 187 shares to cover taxes (the shares to cover were "bought" and sold at same price, so no gain or loss there)
8/29/2019 sold the remaining 488 shares that were granted on 8/21 at a loss (say $1500, yeah rough week); no activity until next item
11/20/2019 "bought" 675 shares (RSU vest)

Since the 8/21 "purchase" was within 30 days of the 8/29 sale, I guess the 8/29 loss is a wash sale. But reading "When the Rule Does Not Apply" in wash rule article at Zacks, it might not be one after all. So is the 8/29 sale a wash sale?

If the 8/29 sale is a wash sale, I'd think the disallowed basis would get added to the basis for the purchase that made it a wash sale -- the 8/21 purchase. But if I add the basis there, I get credit for the loss on 8/29 after all, because the 8/29 sale is made up entirely of shares "bought" on 8/21. That seems like exactly what the wash sale rule is supposed to disallow. So, to which transaction's basis should I add the loss?

Best answer by fanfare

Thanks for the replies!

Still unsure because I didn't sell FIFO, I chose the lot "bought" on 8/21 to sell on 8/29. The shares sold on 8/29 are recorded as the ones purchased on 8/21 in brokerage website / documents.

You're saying you bought shares on 8/21 and sold them on 8/29 (designated lot).

There's no wash sale there since there was no purchase of identical shares (besides the ones you are selling) within the period of thirty days around 8/29.

Separately,

you do have a small loss on the 187 shares to cover, namely a commission, and your form 8949 should reflect that.

fanfare

Level 15

"I get credit for the loss on 8/29 after all"

When you finally sell the identical shares with adjusted basis this is exactly what happens. No problem there.

fanfare

Level 15

correction it is the earliest shares.

That would be 5/23

when you sold 488 shares, those were 5/23 shares.

when you sell you sell FIFO,

if there's any 5/23 shares left you adjust their basis to the extent possible.

if there's any loss unallocated then you adjust the 8/21 shares

until the loss is entirely allocated.

if you had a profit on the 5/23 shares then none of this matters.

someoneAuthor

Level 3

Thanks for the replies!

Still unsure because I didn't sell FIFO, I chose the lot "bought" on 8/21 to sell on 8/29. The shares sold on 8/29 are recorded as the ones purchased on 8/21 in brokerage website / documents.