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Wash sales Taxes implication
Hi,
I recently got my 1099B from fidelity and surprisingly, I see that some of my trades qualified for "wash sales loss disallowed",meaning I cant take Capital gain losses on my taxes this year. What however is the problem is that I do not any of the "substantially similar" stocks etc. I only traded from January to May (very actively ) in stocks, and didn't hold any stock/ETF etc positions from June onwards. So basically, any "replacement investment" has already been disposed off. I wasn't sure how to deal with this in my taxes, since I want to claim that my adjusted cost basis should be applied this year. |
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Yes, the only stock I still hold is Google (GOOGL) while all the other ETFs/stocks etc I was actively trading (and got wash sales loss disallowed for) were oil related.
They would not be considered similar in any way. I am surprised that etrade (mistyped Fidelity first) wouldn't automatically adjust for this. They obviously knew I don't hold any of the replacement stuff anymore? |
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No, it is NOT obvious to the eTrade computer. Do NOT assume the forms are reviewed by humans, because they are not.
You need to make the required adjustment yourself when you enter the data in your tax software, removing the wash sale dis-allowance. Make sure you understand all of the implications, because you can expect the IRS to challenge your adjustments because they are getting a copy of that eTrade statement that shows the wash sale disallowances. |
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You say you were "very active" during those first six months - I assume that means buying as well as selling. Wash sale rules would come into play if at any time that you sold a stock for a loss you also purchased more of that same stock within the time frame of 30 days prior to 30 days after the sale. It doesn't matter that you sold everything by June - the question is what were you buying from December to June, and did those purchases occur within 30 days of sales?
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