In past TurboTax years, I was able to assign code L on Form 8949 for liquidation distributions that I could not report a loss yet. This was done by checking a box in “Select any less common adjustments that apply” that said “Any loss from this sale is not deductible for reasons other than disallowed wash sale...” By assigning code L to the distribution, the loss was “zero’ed out” by an adjustment in column g, and resulted in 0 in column h (Gain or Loss). However this section and option appears to be removed from TurboTax 2023.
I can in TurboTax 2023 assign code W (wash sale) to the distribution, to zero out the loss. But the distribution is not a wash sale by definition…
Please advise.
(Reason I can not report loss: Distributions less than basis. If the total liquidating distributions you receive are less than the basis of your stock, you may have a capital loss. You can report a capital loss only after you have received the final distribution in liquidation that results in the redemption or cancellation of the stock.)
You are correct in the reporting of your liquidating distributions. I do see that Code L is still active for IRS, however you have the ability to adjust the cost basis so that you can change it to the amount of the distribution which would zero out the loss for this year. Keep track of the basis you have used up so far and until you do receive the final liquidating distribution.
Thank you @DianeW777 for the confirmation on reporting liquidation distributions and a work-around for 2023. It's unfortunate TurboTax removed this section; it worked well for this situation in prior years.