PA state form Schedule D doesn't show accurate capital gain due to wash sale disallow amounts. Do I need to adjust? If so, How? I have hundreds of trades.

[ErnieS0]

Your Pennsylvania income tax return should be correct. PA does not recognize wash sales and TurboTax transfers transactions to state without wash sales.

PA says, “The federal wash sale provisions do not apply for Pennsylvania personal income tax purposes. For Pennsylvania purposes, every transaction is considered separate and independent of any subsequent transaction.”

Related Resource:

• Net Gains (Losses) from the Sale, Exchange, or Disposition of Property

[Conrail_G]

The PA income is not correct due to wash sales as Turbotax does not adjust the basis, it simply ignores wash sale losses disallowed. What seems to be happening is something like: Buy X at 100, sell X at 50, buy X at 50 within 30 days (wash sale), later sell X at 100. The net gain/loss for this cycle of transactions is 0, however Turbotax for PA believes it is -50, because it does not adjust the basis correctly.

I have a return showing a 7 figure loss in PA, while the actual capital gains per the federal return and 1099s, etc is a 5-figure gain.

[User4983951]

Yes.  TurboTax does not know the unadjusted basis and proceeds of your trades because that information isn't contained in your 1099B.  This is especially true for chains of wash sales in which the adjusted basis of a previous wash sale is carried over to the next wash sale.  Unadjusted basis and proceeds information needs be retrieved from your broker.  If you have a small number of trades you can enter them manually, but if you have a larger number of trades it's a nightmare, and TurboTax makes sure of that.  Most people don't know this and falsely believe TurboTax is doing the right thing.  If you want to do the right thing to the letter of the law, Pennsylvania requires two separate sets of books. 

[Conrail_G]

Provided that there aren't hanging wash sales in progress at the end of the year, then the brokerage 1099b records can be corrected to the appropriate net gain/loss via adding back the "wash sale loss disallowed" summary totals.

In this case, TurboTax does actually know the unadjusted basis for all trades -- when TurboTax imports the .txf files from the brokers (or other method), both the cost basis and adjustment due to wash sale are listed. It populates the 8949 forms correctly with both unadjusted cost basis and amount of adjustment due to wash sale with code 'W'.

[Conrail_G]

Provided that there aren't hanging wash sales in progress at the end of the year, then the brokerage 1099 records can be corrected to the appropriate net gain/loss via adding back the "wash sale loss disallowed" summary totals.

In this case, TurboTax does actually know the unadjusted basis for all trades -- when TurboTax imports the .txf files from the brokers (or other method), both the cost basis and adjustment due to wash sale are listed. It populates the 8949 forms correctly with both unadjusted cost basis and amount of adjustment due to wash sale with code 'W'.

[tl5000]

Is there a screen to make this adjustment? This is nuts.

For simplicity sake, I may just PA filing by hand,

and just printing out the state form and printing out the brokerage copy of the unadjusted sales.

[Conrail_G]

I ended up adding a bogus transaction at the end which I called "wash sale adjustment" so that all the capital gains/losses netted to the same as the federal form. I don't know if this is the best approach, but at least the tax burden is correct at the end of the day.

[tl5000]

In addition my trades are unreadable and in no order, for instance 1st transaction is sales of 103.50 sh of QSI88765 on Oct 10 - using td ameritrade, my fed cap gains/losses return is fine, my PA return a complete mess

[Conrail_G]

For active traders in PA, TurboTax integration is definitely a problem, I agree. It's not usable without a workaround of either having only a summary net transaction or adding a bogus transaction to compensate for the wash sale adjustment without cost-basis adjustment. Those are the only realistic two options I see.

[GeorgeM777]

As a way of background, PA does not follow the federal wash sale rule/limitations.  The following is from the PA Department of Revenue website:

• The federal wash sale provisions do not apply for Pennsylvania personal income tax purposes. For Pennsylvania purposes, every transaction is considered separate and independent of any subsequent transaction.

Here is a link to the PA DOR website from which the above statement was obtained.  The wash sale section is about half-way down the page. 

PA DOR

@Conrail-G