Do brokers track or report wash sales in IRA?

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Topic Author
Caduceus
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Do brokers track or report wash sales in IRA?

Post by Caduceus »

If I sell a stock that I bought at $11 for $10, incurring a loss of $1, and then buy it back the next day for $10, is this a wash sale that's tracked by my broker if done inside an IRA?

I know that wash sales can have consequences across my portfolio across my various investment accounts, so what's done inside an IRA might affect taxable investments (e.g. if I have transactions in the same stock in my taxable account), but that's not what I'm asking. I'm wondering if brokers are obligated to report as wash sales the transaction I described above. Is the answer that they track it, because the IRS needs to be able to know in case they audit the totality of your investment transactions, or is the answer that they don't track it, because everything in an IRA is not taxable, and it's up to the investor to keep the records for these types of transactions?
livesoft
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Re: Do brokers track or report wash sales in IRA?

Post by livesoft »

No, because if done inside your IRA it is not a wash sale. My brokers track individual lots and their realized gains and losses for each of my accounts including IRAs and 401(k), but all separately.
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sidwin516
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Re: Do brokers track or report wash sales in IRA?

Post by sidwin516 »

livesoft wrote: Fri Mar 19, 2021 12:48 pm No, because if done inside your IRA it is not a wash sale. My brokers track individual lots and their realized gains and losses for each of my accounts including IRAs and 401(k), but all separately.
Yep no washing until it’s outside retirement account.
Topic Author
Caduceus
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Re: Do brokers track or report wash sales in IRA?

Post by Caduceus »

livesoft wrote: Fri Mar 19, 2021 12:48 pm No, because if done inside your IRA it is not a wash sale. My brokers track individual lots and their realized gains and losses for each of my accounts including IRAs and 401(k), but all separately.
Thanks, Livesoft. So to make sure I understand correctly. The broker won't report the transaction I described on any tax form. If there are tax consequences to the transaction I described (e.g. if I sell shares in an IRA for a loss, and then buy back identical shares in a taxable account within 30 days), it's my responsibility to track and declare it correctly come tax time, but there's no way the IRS will actually know about it (from a tax form sent by my broker) unless they do a full audit of all my investment transactions.

Is that correct?

(p.s. it seems you're suggesting that even if you have the taxable account and IRA at the same broker, and you do a wash sale across these two accounts, that they will only track them separately, so they won't report a wash sale executed across accounts.)
dbr
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Re: Do brokers track or report wash sales in IRA?

Post by dbr »

A different question is whether brokers flag a wash sale for a loss taken in a taxable account and the replacement shares bought in an IRA, presumably at the same broker (and under the same named owner?). I don't know the answer to that question.
livesoft
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Re: Do brokers track or report wash sales in IRA?

Post by livesoft »

Caduceus wrote: Fri Mar 19, 2021 12:56 pmThanks, Livesoft. So to make sure I understand correctly. The broker won't report the transaction I described on any tax form. If there are tax consequences to the transaction I described (e.g. if I sell shares in an IRA for a loss, and then buy back identical shares in a taxable account within 30 days), it's my responsibility to track and declare it correctly come tax time, but there's no way the IRS will actually know about it (from a tax form sent by my broker) unless they do a full audit of all my investment transactions.

Is that correct?

(p.s. it seems you're suggesting that even if you have the taxable account and IRA at the same broker, and you do a wash sale across these two accounts, that they will only track them separately, so they won't report a wash sale executed across accounts.)
You now asked a different question, but the answer to your new question is: The broker will not track a wash sale created when you buy substantially identical shares in an IRA after you have sold shares at a loss in your taxable account. Yes, it is your responsibility to track and declare it correctly come tax time. I gave an example of this in the 2015 thread: viewtopic.php?t=179414 where I on purpose created a number of wash sales.

I do not believe the IRS will actually know about it unless they do a full audit of all your investment transactions.
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ruud
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Re: Do brokers track or report wash sales in IRA?

Post by ruud »

Caduceus wrote: Fri Mar 19, 2021 12:56 pm If there are tax consequences to the transaction I described (e.g. if I sell shares in an IRA for a loss, and then buy back identical shares in a taxable account within 30 days)
There are no tax consequences to that sequence of transactions, what you describe is not a wash sale. (Since there's no loss to claim in the first place)
.
Jack FFR1846
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Re: Do brokers track or report wash sales in IRA?

Post by Jack FFR1846 »

To gain anything there, you'd take the loss in your taxable account, then buy in your IRA.

The problem is that now you have cash sitting in your taxable and where do you get the money in your IRA to buy?
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Topic Author
Caduceus
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Re: Do brokers track or report wash sales in IRA?

Post by Caduceus »

ruud wrote: Fri Mar 19, 2021 1:26 pm
Caduceus wrote: Fri Mar 19, 2021 12:56 pm If there are tax consequences to the transaction I described (e.g. if I sell shares in an IRA for a loss, and then buy back identical shares in a taxable account within 30 days)
There are no tax consequences to that sequence of transactions, what you describe is not a wash sale. (Since there's no loss to claim in the first place)
Thanks. Got it. So if I sell shares for a loss in taxable and then buy them back in an IRA, there's a wash sale. But if I sell shares in IRA and buy them back in taxable, there's no wash sales because the initial transaction didn't count as a loss. Now I think I understand.
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