Wash Sale Cross Account TD Ameritrade and Roth IRA

[mich000]

Hi,

I have read a lot about wash sale rules. However, I still could not find an answer for my situation.

For example, I bought 2 options of ticker A on TD Ameritrade on 11/20/2020 for $58 each. Then, I sold one on 11/25/2020 for a gain $130, the other one I sold for a loss -$30 on 11/27/2020. Then, I bought another one on TD Ameritrade on 12/15/2020 and sold for a gain $50 on 12/17/2020. I stopped trading ticker A on TD Ameritrade. However, I then came to my Roth IRA and bought 100 shares of ticker A on 1/5/2021 and sold an covered call. I closed the covered call and sold the shares with a gain for $1000 on 1/14/2021. How should I report tax or how should I do with wash sale to the IRS in this situation?

This is just an example. It crosses from a regular trading account to a retirement account so I am confused here. I hope someone could help me.  Thank you very much!

[Mike9241 · Accepted solution]

options that differ in strike or expiration date can not create a wash sale. calls are different than puts.

For example, I bought 2 options of ticker A on TD Ameritrade on 11/20/2020 for $58 each. Then, I sold one on 11/25/2020 for a gain $130, the other one I sold for a loss -$30 on 11/27/2020. Then, I bought another one on TD Ameritrade on 12/15/2020 and sold for a gain $50 on 12/17/2020.  ASSUMING IDENTICAL AS TO STRIKE PRICE, EXPIRATION DATE AND TYPE THE LOSS FROM THE 11/27 SALE WOULD BE ADDED TO THE COST OF THE 12/15 PURCHASE. WHEN YOU SOLD IT FOR A $50 GAIN (I ASSUMING THIS IS STRICTLY PURCHASE PRICE VS SALES PRICE)" THE WASH SALE ADJUSTMENT WOULD STILL LEAVE YOU WITH A $20 GAIN.    I stopped trading ticker A on TD Ameritrade. However, I then came to my Roth IRA and bought 100 shares of ticker A on 1/5/2021 and sold a covered call. I closed the covered call and sold the shares with a gain for $1000 on 1/14/2021. How should I report tax or how should I do with wash sale to the IRS in this situation? YOU HAVE NOTHING IN YOUR REGULAR A/C THAT WOULD CAUSE A WASH SALE BECAUSE OF WHAT YOU DID IN YOUR IRA A/C. 

[mich000]

Thanks a lot for the info, Mike!

[fanfare]

A wash sale is triggered when a triggering transaction (buy) is done within the wash sale window.

The loss is then denied in whole or in part.

The amount of the denied loss is added to the triggering transaction's basis.

The issue is, since the triggering transaction is never reported (it's in an IRA), you can never take that loss as a deduction on your tax return.

I suspect, many traders will ignore the rule since there's no way for the IRS to know, given current broker reporting.

That could change in the future.

If TD cross checks your regular account and Roth IRA account for this situation, that's news to me.

[mich000]

You could read more here. It is said if "Loss from wash sales of stock or securities. This ruling provides that if an individual sells stock or securities for a loss and causes his or her IRA or Roth IRA to purchase substantially identical stock or securities within a specified period, the loss on the sale of the stock or securities is disallowed under section 1091 of the Code, and the individual’s basis in the IRA or Roth IRA is not increased by virtue of section 1091(d)."

https://www.irs.gov/irb/2008-03_IRB#RR-2008-5