Lets Talk Wash Sales

dmillz

Member
VIP
I keep reading about wash sales, I have numerous Wash sales that account for 60k. A lot of these wash sales where placed in July / August... They still show up in my over wash sales total on my 1099 form. People keep saying that if you dont trade the month of December 31 days... those wash sales fall off, but i am seeing them in my statement from july august sept... So throughout the year if i Incur wash sales they are permanent? Im in a taxable account. Thanks
 
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XeoNoX

Well-known member
VIP
Please consult a CPA or certified tax professional, dont go to H&R Block, paying a good professional CPA thats reputable can save you more than you think. If you dont know one or know anyone that knows one you can simply look online in your area and then call and ask the CPA a few tax questions relating to stocks that you know the answer to and see if they know it off the top of their head, if they dont have time for you or dont know then that means they arent worth your time and call another. You may even possibly call them and ask them how a wash sales works, this should be free quick advice, some will try to make you "come in" to see them, once again if its just a few questions that take less than 5 mins and they cant answer for free its not worth your time and move on to the next CPA/Tax Professional... Call about 20 of them and score them on a piece of paper, look up their reviews online as well. For basic taxes with stocks should be around $150-$250 fair price... if you have property and other assets and businesses or 1099s it may be more. You may think calling 20 CPA is extreme, but this is your hard earned money, and if you make a significant amount of money you should be trying to save a much as possible and need a excellent CPA... only you can protect and help save yourself money, however you have to put in the time to do so.

Do not take the following as advice however my interpretation is Tax lot and tax method when you signed up can make a difference, such as first in first out or first in last out , etc... If your accounting does basic total capital gains along with method short term holds (less than 12 months) it wont really matter, if you are trying to account for a asset/security in which you held over 12 months to get the tax break then wash sale would matter and the tax method you chose would matter. It can get more complicated, but this covers what i assume most people get confused/worried about. Once again this is not tax advice, this is simply my interpretation, so i advise you to seek a professional.
 
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scott69

Member
There is much literature from the IRS, the ultimate judge, on this subject. Also, if your broker is reporting this to you, they are also reporting it to the IRS. Your tax return must agree with this report or you will be audited. Saying this from experience.Good luck.
 

dmillz

Member
VIP
I got it worked out peeps, Your Wash sales basically go into your cost basis after 30 days. So The math works out. I Have a good CPA but crazy how these wash sales arent really spoken about until the 1099-B comes LOL My advice to anyone is to not trade the last 31 days of the year and your wash sales will essentially wash away...
 

XeoNoX

Well-known member
VIP
I got it worked out peeps, Your Wash sales basically go into your cost basis after 30 days. So The math works out. I Have a good CPA but crazy how these wash sales arent really spoken about until the 1099-B comes LOL My advice to anyone is to not trade the last 31 days of the year and your wash sales will essentially wash away...
that advice is subjectable, for instance that could possibly be a bad idea for a day trader or someone who just uses short term capital gain method. In the end wash sales are really subjectable and varies to BOTH the person's trading strategy and tax strategy. Once again a good CPA would be able to do the math and tell you what's in your best interest.
 

codydog

Active member
You may want to consider googling for some word combo, like daytrader and wash sales, or how do wash sales affect day trader. There are benefits and drawbacks to running a 'trading business'. Your CPA should be able to sort out any mess you've gotten into.
 

griff32

New member
VIP
I apologize i was just trying to see if someone was able to code a column for potential wash sale trades. Maybe the column could be red/green. Red possibly shows the amount of days remaining before you could theoretically trade that symbol without it being a wash sale trade. And green maybe just a check or nothing, doesn't matter, could be just green.
 

lostcoastsurf

New member
"Wash sales" are just a deferral. It's just a timing difference. You can't take the loss at the end of year for securities that you bought and sold within 30 days because "investors" would take a loss for tax purposes at the end of year, then quickly "rebuy" after the 1st, so the IRS says you can't "wash" your losses if you really plan on keeping the stock. So you have to add the loss to the "basis" in the stock you held. And even if you were "flat"(not holding any stock) at the end of the year, you still are disallowed the loss if you traded the same security within 30 days. But the loss is only a deferral. You still take the loss, just a year later. So if you want to try to do your own tax return you have to look at your 30 day window before/after the year end and see if any of those losses are disallowed because you traded the same security in that time frame, and add those "wash sales" onto your capital gains for this year. The Ameritrade statements give all wash sales through out the year just because it calculates them on going. But the only ones you care about are that 60 day window before/after year end. Hope this helps.

<Disclaimer:> THIS IS NOT TAX ADVICE
 

griff32

New member
VIP
my apologies again, no that is not my definition of wash trades. I am aware of the implications of taking a wash trade. The point being was i thought it would be nice to have a column that would tell you if the trade you were about to take would be classified as wash sale. That way before making that trade you can go back and look to see with the current trade setup R/R, is that trade worth taking due to wash sale rules. That was all. As far as "detecting" the wash sale, i currently just filter my trade history by 31 days to verify any losses to see if i need to run the numbers, which there are many online calculators to make this quick. That is how i currently look for them, also there is a tax software called trade log which will do it for you and your taxes if your that serious of a trader. Which I am not at that level, but i do try and play the game as efficiently as possible, and avoiding excess wash trades is part of it.
 

rad14733

Well-known member
VIP
@griff32 I guess you're going to have to figure it out yourself and share with the community... There doesn't appear to be much interest at this point... I was just trying to get clarification on your interpretation of "wash sales"... I have no interest in attempting to see whether your concept can be coded... I think it is subjective and would be difficult to code with any accuracy... Maybe another member has ideas to share...
 
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