Does "Capital Loss Carryover" in Turbotax include "wash sale not allowed"? The 1099 B shows wash sale not allowed of $36,627, but capital lost carryover only show -$295

[CiCi1]

Two tax forms received from Robinhood.
Form one: wash sale loss disallowed: $36627.61
Form one: net loss: -$2545.53
Form two: wash sale loss disallowed:$6471.56
Form two: net loss:-748.69
Stocks, Mutual Funds, Bonds, Other shown in Turbotax: -3295
Capital loss carryover shown in Turbotax: -295

I understand the maximum loss that I can claim is $3000, so 3295-3000=295, which is carryover to the next year. However, is the 295 all that I can claim next year? Am I able to claim the "disallowed wash sale" total of $36627.61+$6471.56=43099.17 for the next year? Thanks

[TomYoung · Accepted solution]

No, you're not allowed to claim the "disallowed wash sale" dollars next year as some sort of separate entry or correction to your reporting of your security sales in 2019.

Understand that the "wash sale disallowed" figure is simply the sum of every loss  you realized on every trade you made that was considered a wash sale loss trade.  But the broker adds that disallowed loss to the "purchase price" basis of the replacement shares and includes that additional basis in the "basis" reported on the 1099-B.  In other words there's a large amount of "netting" going on that's difficult to see.  That $2,545.53 loss on form one includes some amount - but clearly not all - of the wash sale losses you incurred throughout the year.  There's some amount of that loss that's now "embedded" in the basis of the shares you owned at the end of 2018. 

When you sell those shares that include some amount of "wash sale loss" in addition to their "purchase price" basis, that's when you'll get the tax benefit of the disallowed losses.

Tom Young

[CiCi1]

Hi Tom, thanks very much for your answer. By end of 2018, I have no share left in my account. But just purchased a few back in January of 2019. Then sold them all again on the same day. I have no share in my account since then. In this case, am I able to claim the "wash sale loss disallowed"next year? Something really confused me is that my real net loss was a little more than $5k, but the 1099B states I have wash sale loss disallowed of more than $40k...

[TomYoung]

As I explained, the "wash sale loss disallowed" is simply the SUM of all your wash sale loss trades.  It's NOT a deferred loss you can claim later.  Undoubtedly a big part of the wash sale losses is INCLUDED in the basis figure reported on the 1099-B.  And, maybe, some of the wash sale loss is embedded in the basis for those January purchases if they were replacement shares associated with December wash sale losses.  

Brokers have had to pretty much perfect these systems since the IRS dictated to them how they needed to do their 1099-B reporting back in 2010.