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Author: hk2 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121568  
Subject: Wash Sales losses Date: 3/15/2012 7:44 PM
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The first half of last year I was an active trader. My 1099 has a slew of transactions flagged as "wash sale, loss not allowed".

Although I've since sold everything and gone months without repurchasing those stocks, it's not clear to me when/how to realize those short term losses.

I'd appreciate someone pointing me in the right direction on this topic.



Thanks,
Jim
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Author: AngelMay Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 115513 of 121568
Subject: Re: Wash Sales losses Date: 3/15/2012 7:57 PM
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The first half of last year I was an active trader. My 1099 has a slew of transactions flagged as "wash sale, loss not allowed".

Although I've since sold everything and gone months without repurchasing those stocks, it's not clear to me when/how to realize those short term losses.



Double-check your 1099.
I also had a wash sale loss - but my brokerage firm kindly added that loss to the cost of a second lot of that stock so I got the "advantage" of the loss (if you can call it that).

Maybe your broker did the same for you.

Otherwise, you will have to buy that same stock again and add the loss from the wash sale to the cost. At least I think that's what you have to do.

Wait for experts here. They will know for sure.

AM

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Author: CABob Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 115518 of 121568
Subject: Re: Wash Sales losses Date: 3/16/2012 2:32 PM
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A wash sale occurs when a stock is sold for a capital loss and the purchase and sale occur within a 31 day period of time. In order to realize the loss you would have to buy the stock again, hold for at least 31 days, and then sell it.

Bob

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Author: TMFPMarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 115519 of 121568
Subject: Re: Wash Sales losses Date: 3/16/2012 3:06 PM
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My 1099 has a slew of transactions flagged as "wash sale, loss not allowed".

Although I've since sold everything and gone months without repurchasing those stocks, it's not clear to me when/how to realize those short term losses.


Some questions.

1. What exactly are you seeing on the 1099-B? Not on any supplemental information, but the 1099-B itself. What boxes have information?

2. Do you understand the wash sale rules and how you treat the disallowed loss? Briefly, the loss is added to the basis of the replacement shares, thus increasing your loss/decreasing your gain when you sell those shares. Details are in Pub 550.

Since you disposed of everything and didn't repurchase within 30 days of your last sale all losses will be recognized on your 2011 1040. We just have to figure out how you enter things, and that will depend on what's on the 1099-B.

Phil
Rule Your Retirement Home Fool

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Author: Hohum777 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 115522 of 121568
Subject: Re: Wash Sales losses Date: 3/16/2012 5:39 PM
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A wash sale occurs when a stock is sold for a capital loss and the purchase and sale occur within a 31 day period of time. In order to realize the loss you would have to buy the stock again, hold for at least 31 days, and then sell it.

Bob


I don't understand this need to purchase another lot of shares to realize the loss.
A wash sale situation is created by the presence of a second set of shares. Specifically,
a second set of shares purchased within a 30-day window of a loss-yielding transaction.
If the second set of shares create a wash situation, well, ... that means there's a third set of
shares involved.

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Author: vkg Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 115523 of 121568
Subject: Re: Wash Sales losses Date: 3/16/2012 6:35 PM
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I don't understand this need to purchase another lot of shares to realize the loss.

Is this off a 1099-B? It sounds like the brokerage didn't closely review the statement. The statement has elements of truth, but the way it is constructed it is wrong.

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Author: CABob Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 115524 of 121568
Subject: Re: Wash Sales losses Date: 3/16/2012 10:45 PM
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A wash sale occurs when a stock is sold for a capital loss and the purchase and sale occur within a 31 day period of time. In order to realize the loss you would have to buy the stock again, hold for at least 31 days, and then sell it.

Bob

I don't understand this need to purchase another lot of shares to realize the loss.
A wash sale situation is created by the presence of a second set of shares. Specifically,
a second set of shares purchased within a 30-day window of a loss-yielding transaction.
If the second set of shares create a wash situation, well, ... that means there's a third set of
shares involved.

Perhaps I engaged the keyboard before my mind was operating properly. Or perhaps I was confused by the OP.

Bob

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Author: vkg Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 115525 of 121568
Subject: Re: Wash Sales losses Date: 3/17/2012 1:08 AM
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Perhaps I engaged the keyboard before my mind was operating properly. Or perhaps I was confused by the OP.

Bob


The statement is very confusing, and not accurate. The more I read it, the less sense it makes.

A wash sale occurs when a stock is sold for a capital loss and the purchase and sale occur within a 31 day period of time.

This is not true. It is the repurchase of shares within the 31 day period that triggers the wash sale. You can sell stock instantly at a loss and realize the loss, as long as the stock is not repurchased within 31 days.

In order to realize the loss you would have to buy the stock again, hold for at least 31 days, and then sell it.

This continues the confused first statement. Somehow, buying the stock again is suppose to fix a non-existent problem of not holding the first shares for 31 days.

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Author: vkg Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 115526 of 121568
Subject: Re: Wash Sales losses Date: 3/17/2012 1:11 AM
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The first half of last year I was an active trader. My 1099 has a slew of transactions flagged as "wash sale, loss not allowed".

Although I've since sold everything and gone months without repurchasing those stocks, it's not clear to me when/how to realize those short term losses.

I'd appreciate someone pointing me in the right direction on this topic.



Thanks,
Jim


Did you own any of the stock at the start of 2011?

Since you sold all of the stock and have been out of it for more than 31 days, the last sale of each of the stocks realizes the loss of all previous wash sales.

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Author: vkg Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 115527 of 121568
Subject: Re: Wash Sales losses Date: 3/17/2012 1:12 AM
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Perhaps I engaged the keyboard before my mind was operating properly. Or perhaps I was confused by the OP.

Bob


Please ignore my last response. Unfortunately, I also engaged keyboard without understanding the sequence of the thread.

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Author: hk2 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 115529 of 121568
Subject: Re: Wash Sales losses Date: 3/17/2012 10:22 AM
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Thanks for everyone's input. I understand the basic concept of the wash sale but I couldn't connect my basic knowledge with the limited info that appeared on the 1099-B.

It wasn't until I bounced my records against the 1099-B that things became more clear. It took a bit to keep things straight in my head since my trade cost basis differed from my 'tax rule' cost basis, even on some trades with a capital gain (due to loss carry over)


Thank goodness for Quicken/TurboTax. As I filled in the boxes, I would glance at the underlying new tax form to see how things fell out. Yikes!! I might have opted for jail time over trying figure out how to do that manually for 300 round-trip trades.

And most mercifully, last night my brokerage made the 1099-B data available for import to TurboTax. So that section of my return was done in about 15 minutes (I was looking at 15+ hours keying it in by hand)



Thanks,
Jim

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Author: AngelMay Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 115530 of 121568
Subject: Re: Wash Sales losses Date: 3/17/2012 10:34 AM
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This is not true. It is the repurchase of shares within the 31 day period that triggers the wash sale. You can sell stock instantly at a loss and realize the loss, as long as the stock is not repurchased within 31 days.



I'm sure someone else has already jumped on this but....
What you said here is not true, either.

If you sell 100 shares of AAPL, for example that you bought on January 15th, you will have a wash sale if you still have shares of AAPL that you bought on January 2nd.

The 30 day "window" is really a 60-day window: 30 days on either side of the purchase date of the shares you sold.

I still don't know what triggered the wash sale I had (because I've been too lazy to check) but I know that my brokerage firm automatically added the loss to the cost of the rest of the shares I sold (which were purchased long before). I'm thinking that just maybe they are now looking at both your taxable accounts AND your IRA(s) for evidence of purchases of the same stock within that 60-day window.

For me, I'm not worried about it because I later sold all shares and realized the loss.

AM

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Author: vkg Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 115531 of 121568
Subject: Re: Wash Sales losses Date: 3/17/2012 11:07 AM
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I'm sure someone else has already jumped on this but....
What you said here is not true, either.


Yes, I was tired and my statement wasn't complete.

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