Is there anyway I can add the deferred loss due to wash sale and cost basis reported to irs by broker with a note that explains the difference?

[MichaelL1]

If it is a Wash Sale then the loss disallowed gets added to the cost basis on the remaining stock.  Was this stock sold?

[TomYoung]

There's no way to put "a note" into the income tax return unless you file by mail.  Are you speaking of a sale that you made in 2017 where the broker is reporting a wash sale loss or are you speaking of a sale of the "replacement shares" that arose from a wash sale loss and want to add the deferred loss to that sale?

[dtn2]

it is a wash sale and loss was disallowed. For the replacement shares that was also sold in 2017, i used "enter additional info on my own" in order to add the deferred (disallowed) loss to the cost basis. however, in the Wash sale loss disallowed box, turbotax only allows to enter as positive amount and treated like a gain and subtract it from the cost basis instead of adding it to the basis cost.  What should I do to add the deferred loss to the cost basis of replacement shares.

[dtn2]

I have another question: for 1 stock, i have 3 sales in 2017. first sale, i have disallowed loss, let say, 30$. second sale, the disallowed loss was 10$. should i add first deferred loss 30$ to the basis cost of second sale and makes its deferred loss 40$ (instead of 10$) and then add the 40$ deferred loss to the basis cost of third sale. OR should i let the first 2 sales unchanged, and add total deferred loss to the basis cost of the third sale.

[TomYoung · Accepted solution]

So you are dealing with a sale of the replacement shares in 2017, correct?

First, double check and see if the broker hasn't already added the disallowed loss to the sale of the replacement shares, meaning you don't have to adjust anything.  Broker systems are increadably "smart" these days and recognize the sale of replacement shares as exactly that and add back the disallowed loss.

If the broker hasn't done that then delete the sale and re-enter the 1099-B exactly as it reads and then click on the Guide me step by step blue button.  Click the "my sale involves one of these uncommon situations" and work through the interview  On the page "Did you buy this stock?" click "I bought this stock in a wash sale window" and you'll shortly come to a page where you're asked for the "Deferred loss from wash sale."

Tom Young

[dtn2]

thank you. this is the info I need.

[dtn2]

I have another question: for 1 stock, i have 3 sales in 2017. first sale, i have disallowed loss, let say, 30$. second sale, the disallowed loss was 10$. should i add first deferred loss 30$ to the basis cost of second sale and makes its deferred loss 40$ (instead of 10$) and then add the 40$ deferred loss to the basis cost of third sale. OR should i let the first 2 sales unchanged, and add total deferred loss to the basis cost of the third sale.

[TomYoung]

I actually don't know what the "prescribed" procedure is here.  But as long as you come out to the correct gain/loss across the 3 sales I don't really think it makes any difference.  If you have your income or loss properly stated the IRS can't really ding you for "style."

[dtn2]

thank you for your help. i probably put all deferred loss to basis cost of the last sale.

[fanfare]

The rule is , find the earliest identical shares not already matched to another wash sale.
But why are you doing this yourself? are the share non-covered shares purchased before 2011?
Your broker may use it's own rules. I tried to understand the replacement algorithm TD Ameritrade used versus my calculations. After many days, I gave up and just reported exactly what they put on my 1099-B

[dtn2]

i have e-trade and these are covered shares. they did not adjust the basis cost due to wash sale.

[dtn2]

i also have fidelity and this broker adjust the basis cost due to wash sale.

[dtn2]

another question, if the replacement shares have not been sold.  the adjustment of basis  cost have to wait until these shares are sold?

[fanfare]

no, you adjust now for your records and mark those shares matched. when you sell the replacement shares, the arithmetic is already done.