I thought that brokerage companies would take care of tracking wash sales and increase the basis of remaining shares appropriately if a wash sale occurred.
Last month I asked my brokerage about this and they said that they do this within a given account, but if I sold for a loss in my taxable account and then bought in my IRA causing a wash sale, they would not reflect the wash sale in my taxable account. However, they pointed out that the IRS would still consider it a wash sale.
So, on 9/26 and 10/4 I sold some SQ shares at a loss in my taxable account, but was careful to leave five shares to receive the increased basis should I decide to buy some back in a dip.
Having forgotten about the sales in the taxable account, on 10/19 I bought some SQ in my IRA. The purchasing of the SQ in the IRA triggered the wash sale for the shares I had sold in the taxable account earlier in the month.
I had been planning to take the easy route and simply report the net amounts on the tax form since the brokerage would have sent them to the IRS.
But now it seems that I will have to report that account item by item and check off the wash sale box for the shares of SQ.
The loss I could not claim due to wash sale should now be added to the basis of the remaining five shares. I will have to track this manually since the brokerage does not consider it a wash sale.
The simplest course of action seems for me to wait 30 days until the 10/19 purchase and sale is out of scope for wash sales and then sell the remaining five shares.
So my return would look something like (numbers are made up):
10/4 sold 20 shares SQ; proceeds $1200; basis $2000; loss ($800) wash sale
12/4 sold 5 shares SQ; proceeds $300; basis $1300 (i.e. $500 + $800); loss ($1000)
It seems to me that my logic is correct, but I worry that since this will not match what the brokerage will be reporting it might draw some attention and I might have some explaining to do.
Any thoughts?
Last month I asked my brokerage about this and they said that they do this within a given account, but if I sold for a loss in my taxable account and then bought in my IRA causing a wash sale, they would not reflect the wash sale in my taxable account. However, they pointed out that the IRS would still consider it a wash sale.
So, on 9/26 and 10/4 I sold some SQ shares at a loss in my taxable account, but was careful to leave five shares to receive the increased basis should I decide to buy some back in a dip.
Having forgotten about the sales in the taxable account, on 10/19 I bought some SQ in my IRA. The purchasing of the SQ in the IRA triggered the wash sale for the shares I had sold in the taxable account earlier in the month.
I had been planning to take the easy route and simply report the net amounts on the tax form since the brokerage would have sent them to the IRS.
But now it seems that I will have to report that account item by item and check off the wash sale box for the shares of SQ.
The loss I could not claim due to wash sale should now be added to the basis of the remaining five shares. I will have to track this manually since the brokerage does not consider it a wash sale.
The simplest course of action seems for me to wait 30 days until the 10/19 purchase and sale is out of scope for wash sales and then sell the remaining five shares.
So my return would look something like (numbers are made up):
10/4 sold 20 shares SQ; proceeds $1200; basis $2000; loss ($800) wash sale
12/4 sold 5 shares SQ; proceeds $300; basis $1300 (i.e. $500 + $800); loss ($1000)
It seems to me that my logic is correct, but I worry that since this will not match what the brokerage will be reporting it might draw some attention and I might have some explaining to do.
Any thoughts?
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