2 Accounts, Same Bought Symbol in Each, Wash Sale Question:

[Tax2019Pay]

Hi, can you elaborate your last statement about selling the 75 shares in Broker B today?

There are two potential scenarios:

1. the 75 shares bought in Nov at gain (the broker 1099B may not show this as a wash sale)

2. the 75 shares bought in Nov at loss (the broker 1099B will show this as a wash sale since it appears that you bought and sold at loss within 30 days)

Irrespectively, do you have to use the oldest shares bought to calculate the disallowed loss for wash sales?

[NCperson]

@Tax2019Pay yes, you have to use the oldest lot for the washsale when multiple lots are sold at the same time - that is the rule

your potential scenarios are not correct.  If you sell that lot of 75 shares today, there are no purchases you made of that same security within the last 30 days (you stated it was purchased on Nov 1.), so there is no wash sale impact if you had any other lots of the security. 

if you sell the 75 shares purchased on Nov 1 at Broker B today (being the last day of the year), that would close out your entire position in the holding.  That negates the issue of any wash sale reporting in 2022. 

remember that in your first scenario, the loss is not allowed, but it is not lost forever - it is simply deferred until you sell that last lot which is what would occur today if you sell .  in this scenario whether you report the washsale and then increase the cost basis of the last lot, or simple not report the wash sale at all, the math takes you to the exact same place.

[Tax2019Pay]

Understood - the math works and it makes sense.  Thanks for taking time to explain.  Sincere thanks.  

[Tax2019Pay]

If the very first scenario changes a bit the Broker A 500 shares sold on Dec 1 are all long term covered loss, whereas Broker B purchase 75 shares were on Nov 1.  If one sells the 75 shares in Broker B today, does the match still get you to the same place i.e., is there any short term vs long term gain/loss issue?  Is my understanding correct on the following:

"Losses on your investments are first used to offset capital gains of the same type. So, short-term losses are first deducted against short-term gains, and long-term losses are deducted against long-term gains. Net losses of either type can then be deducted against the other kind of gain." as per quoted on this message board.

[NCperson]

@Tax2019Pay - that quote is my understanding as well....look how schedule D works, esp. lines 7 and 15 which get combined on line 16

https://www.irs.gov/pub/irs-pdf/f1040sd.pdf