Since my 1099-B has more than 3000 transactions from Motif Investing, TT cannot import it and tells me to mail in 8453 form with 1099-B. But the 1099-B is 326 pages long.

[mister_ee_man]

Hi Critter,

I know it's been years since you wrote this, but I think I am taking your advice here since I have thousands of transactions covered and only 1 not-covered.  But when I tried doing exactly what you said (enter by section rather than 1-by-1), it asked for the lump sum total of sales and basis, but no option to enter dates. It also said it required form 8453 even before I entered the non-covered trade just because most my trades had wash sale adjustment. Anyway, since you said you entered various for basis and 12/31/2018 for sale, I imagine that you must have entered it as a 1-by-1. So I did that (entered the summary amounts as a single covered trade and named it short term covered total) and it no longer said it required form 8453. Even after I added the 2nd one as a non-covered trade, it still never asked for the form. Does that sound right? Did you continue to use this method these days? Thank You!

[DianeW777]

Yes, you can use summary totals which should be long term and short term transactions. You can further separate by covered and noncovered if you choose.  Regardless of how you choose to do it you may want to file Form 8453 and a copy of your 1099-B, after your tax return has been accepted. You can also wait to see if the IRS does request it later, if TurboTax doesn't indicate you should file it.  See the information below if you want to mail now.  Review the wash sale rules below.

Wash sales cannot be combined into section totals.  They should be entered individually so that you can track your cost basis and know when you are allowed to use the information on a final sale.

Wash Sale Rule Defined:

• 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 of other stock.

Affect on Cost Basis:

• The loss that occurs on a wash sale is added to the cost basis of the shares purchased that created the wash sale.
• When all shares are sold and there is no repurchase, that increased cost basis will be used in full and used to determine gain or loss.

As long as you are tracking the wash sales and are not using them on the tax return when you are not allowed, then you can simply enter the same cost basis as the selling price. This will  reconcile your tax return with your Form 1099-B Proceeds which is what the IRS is comparing.

Wash Sale ends:

The wash sale disallowed is not added to the net gain/loss rather it is adjusted and suspended so that it does not affect the total gain or loss for any pending wash sales.  The rub is that the broker only knows when a wash sale occurs, not when a wash sale no longer exists. This can spill over between two tax years.  Likewise you can have a wash sale during a tax year, and then fully dispose of the stock in the same year which would eliminate the wash sale rule for the final sale of the same stock. 

It's up to you to know when you no longer have to consider the wash sale rule. 

Example: 

X bought 5 shares of ZZZ stock, at $5 per share, then sold it for $3 per share, however immediately before the original 3 shares were sold, X bought another 5 shares at $5.00 per share.  

     $25 for the first block of shares

       15 is the proceeds creating a $10 loss 

The $10 loss is now added to the cost of the new shares for an overall cost basis of $35.  

Once the second block of shares is sold (5 shares with cost basis of $30) without any repurchase with in the 60 day window (30 days before or 30 days after the sale), and if they are sold at a loss, then no wash sale exists on the sale, and a loss is allowed.

If you are e-filing your tax return, then mail your statements (1099-Bs or other document showing detailed sales information) along with Form 8453 to: 

Internal Revenue Service

Attn: Shipping and Receiving, 0254 

Receipt and Control Branch 

Austin, TX 73344-0254

If you need a blank Form 8453, you can download this pdf, enter your address information and check the box for Form 8949 (this form is really just a cover sheet)

@mister_ee_man 

[mister_ee_man]

I have many thousands of transactions and many thousands of washsales. Can't enter each one separately.

Can I enter the totals separately for each stock/security? (total proceeds, total basis, and total washsale are summed up for each stock). I only traded like 31 different stocks so can't I just put 31  entries in using the 31 totals for each and put various for the buy date and put the date of last sale for each as the sale date?

[DaveF1006]

Yes, you may summarize stock transactions.  Here is the procedure.

1. Open or continue your return.
2. Go to stock sales.
3. Answer Yes to Did you sell any of these investments in 2024?
   • If you land on the Let’s finish pulling in your investment income screen, select Add investments.
4. On the Let's import your tax info screen, select Enter a different way.
5. On the OK, let’s start with one investment type screen, select Stocks, Bonds, Mutual Funds.
6. Continue through the interview and select Enter sales totals instead when prompted.
7. You'll now be able to enter the total proceeds (sales) and cost basis, along with the sales category. Refer to your 1099-B for the amounts and categories. When finished, select Continue.
8. You can add additional sales totals by selecting the Add another sales total on the Review your sales section totals screen.

Once you entered the information, you may electronically file the return but there are additional steps you may need to make after filing.

1. You may need to mail Form 8949 along with Form 8453 and copies of your broker's year-end statements that show the individual transactions. This is required if your summaries include adjustments (like wash sales) or if the transactions fall outside certain categories (e.g., Box A or Box D transactions without adjustments).
2. Exceptions: If your transactions are in categories A or D (short-term or long-term covered transactions without adjustments), you may not need to mail additional documentation. TurboTax will inform you whether you need to mail in this additional information.
3. Sometimes, you can use your broker's year-end statements instead of Form 8949. Make sure they have all the required information and are similar to Form 8949.