Pennsylvania wash sales

[rcerveny2002]

I am trying to figure out how to include wash sales in my Schedule D for PA. This is all I can find

https://www.revenue.pa.gov/FormsandPublications/PAPersonalIncomeTaxGuide/Pages/Gains-Losses-Sale-Exc...

Wash Sales
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.

Do I just use 1d and 1e from my 1099B and exclude 1g?  When I enter everything correctly from my 1099-B into Turbo Tax my federal return is correct but my state return for PA shows I have no taxable gain because of wash sales.   I want to make sure turbo tax is handling this correctly.   

[ErnieS0]

No. TurboTax should automatically exclude amounts from Form 1099-B, box 1g from your Pennsylvania income tax return.

The adjustment should be done automatically.

Check the Gain and Loss Summary in the Pennsylvania section. If you have to make a manual adjustment for a wash sale, click edit next to the appropriate transaction.

[rcerveny2002]

Turbo Tax did exclude amounts from Form 1099-B, box 1g on my PA return.   I can't check/enter the transactions separately as my 1099-B is 842 pages and Turbo Tax desktop won't import that many transactions so I used the totals for each box.  This is my first year making profit and find it strange PA to not recognize wash sales, as every transaction is treated separately, so they think I lost a huge sum of money.  

I looked at previous year returns and stocks that I had a gain on for the federal level were a loss due to PA not following the federal wash sale rules.

[ErnieS0]

Pennsylvania’s income tax system is different from many states and stems from its organization as a commonwealth.

The state’s constitution decrees that: “All taxes shall be uniform, upon the same class of subjects, within the territorial limits of the authority levying the tax, and shall be levied and collected under general laws.”

As a result, income is divided into eight classes and a loss in one class of income may not offset against income in another class, nor may gains or losses be carried backward or forward from year to year.

[cinron]

I just added a new line at the end of PA Gain/Loss schedule and put an adjustment amount in for the difference the Pa schedule was showing (which was a big loss from adding back a total from wash sales from the federal return) and the true gain/loss with no wash sales.  The trick is to find a report from your broker that shows gain/loss with no wash sale activity.  Tax reports from the broker will show the wash sale disallowed on one transaction but not the cost basis adjustment that gets rolled into the next transaction.

[fanfare]

a "wash sale loss disallowed" is allowed on the triggering transaction, so if you are actively trading the net result is the same as no wash sales.

A difference only arises is if you have a triggering buy still outstanding in your account at the end of the year.

The IRS wash sale reporting rules are an heirloom leftover from ninety years ago.

[rcerveny2002]

Right now I am trying to figure out what total I should use for what I made in 2020.  I already know that it is not the amount I am being taxed on federally because of wash sales.  So the options are

1. end of 2020 account balance - start of 2020 balance = (gain)
2.  The total I get from allowing the wash sales that are disallowed = (big loss)

My 1099-B is 842 pages.  So I am just going with summary numbers.  

I will be declaring Mark-to-Market stating in 2021 since I will have no problem getting Trader Tax Status

[fanfare]

Wash Sales

"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."

After adding all you gains and losses for the year, the result on the federal should be equal to the result on your PA return ignoring wash sales,

EXCEPT FOR, any triggering buy(s) still outstanding at year end.

These should be few in number if not none.

Therefore on the PA return, supply the federal transaction detail.

Don't you agree ?

P.S. If your broker teams with Gainskeeper, you can get a report of transactions without wash sales accounted for.

[Alv545]

Can someone explain to me why the wash sale rule is showing that I lost a lot more many than I actually did? Or did I actually lose $10,000? My net Gain is $2,260, but my wash sale disallowed is showing $7,900. Did I actually lose $10,000? Something just does not seem right. I thought I only lose $2,260. Let me know if I need to better explain...

[fanfare]

When "wash sale loss" is disallowed for tax purposes, that is a real loss, you can be sure of that.

As I explained tried to explain above, if you close out the triggering transaction, your loss is then used for tax purposes.

That doesn't change the fact that you lost money in the stock market.

[fanfare]

ASSUMING you closed out all your trades triggering wash sales,

If your net gain is -$2,260, your actual loss is   -$10,160.

If your net gain is +$2,260, your actual loss is  -$5,640.

Another way to calculate your gain/loss it to subtract your year end balance in 2019 from 

your year end balance in 2020. An investor can't use that number for tax purposes !

[Alv545]

Thanks for the explanation! I just thought it was weird when I go to my brokerage is shows my realized loss is only $2,260... so I thought that is what I actually lost.. not 10k... I didn’t even have that much in my trading account for most of the year.. 

[Alv545]

For instance the last 4 minutes of this video I feel explains my problem a bit.

https://youtu.be/gpXq72JkX3Y

[fanfare]

The stock market is a masterful tool for taking money out of your pocket and into the pockets of others.