Wash Sale reporting with two brokers

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LoveTheBogle
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Wash Sale reporting with two brokers

Post by LoveTheBogle »

Anyone love figuring out wash sale reporting that can assist?!?

I ended up receiving two 1099-B's with similar purchase date (within a week of each other) and exact same sold date for tax loss harvesting in March 2020. I did all of this buy and sell with the same symbol but then on the sold date I purchased a different symbol with the proceeds from the tax loss harvesting.

Broker 1 does show that one of the four transaction was a wash sale with the "1g Wash Sale Loss Disallowed" listed. Of course it doesn't know about broker 2 and broker 2 doesn't know about broker 1.

Is there a Boglehead community spreadsheet to insert in date acquired, date sold, proceeds, cost basis, etc to auto calculate what will and won't be a wash sale? I see that there are some paid programs online to do it but I'm a bit sketched out as they seem like one off programs that could have spyware.

I had 4 transactions with Broker 1 and 1 transaction with Broker 2 that all share the same sold date (5 transactions all share the same sold date) and the actual date acquired are all within the same week in March yet only one transaction of the four in broker 1 shows a wash sale. I'm worried the broker 2 buy/sell may constitute additional wash sale loss disallowed but don't know. Help please! :sharebeer
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iceport
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Re: Wash Sale reporting with two brokers

Post by iceport »

LoveTheBogle wrote: Mon Sep 20, 2021 12:48 pm Is there a Boglehead community spreadsheet to insert in date acquired, date sold, proceeds, cost basis, etc to auto calculate what will and won't be a wash sale? I see that there are some paid programs online to do it but I'm a bit sketched out as they seem like one off programs that could have spyware.
I don't know of any reliable calculators like that, but if you provide that data to us we could help you determine whether any wash sales were created. You can fictionalize the dollar values/number of shares involved, but they should be roughly representative of real life in terms of relative numbers of shares remaining vs. sold, replacement shares, etc. Most critical are all transactions within the 61-day wash sale period surrounding the sale date(s).
"Discipline matters more than allocation.” |—| "In finance, if you’re certain of anything, you’re out of your mind." ─William Bernstein
hachiko
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Re: Wash Sale reporting with two brokers

Post by hachiko »

Did you close out all your positions by the end of 2020 and not repurchase anything in January 2021? If yes, I wouldn't worry too much about the wash sales adjustments and offsets.
Made money. Lost money. Learned to stop counting.
Topic Author
LoveTheBogle
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Re: Wash Sale reporting with two brokers

Post by LoveTheBogle »

iceport wrote: Mon Sep 20, 2021 1:43 pm I don't know of any reliable calculators like that, but if you provide that data to us we could help you determine whether any wash sales were created. You can fictionalize the dollar values/number of shares involved, but they should be roughly representative of real life in terms of relative numbers of shares remaining vs. sold, replacement shares, etc. Most critical are all transactions within the 61-day wash sale period surrounding the sale date(s).
Below is organized according to purchase date rounded to nearest $5k. The sell date is all the same of March 17, 2020. I did not repurchase this symbol after selling.

Code: Select all

Purchase - Basis - Proceeds - Notes
2020/03/02 35,000 25,000
2020/03/03 50,000 35,000
2020/03/06 95,000 85,000 *1099-b says 8,000 wash sale loss disallowed
2020/03/06 15,000 10,000
2020/03/09 60,000 55,000 *broker 2 1099-b


hachiko wrote: Tue Sep 21, 2021 1:02 am Did you close out all your positions by the end of 2020 and not repurchase anything in January 2021? If yes, I wouldn't worry too much about the wash sales adjustments and offsets.
No, I didn't close out 100% of this symbol position but I did close out 100% of the short term of it all at a loss.
Yes, I did not repurchase this same symbol after selling it.
livesoft
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Re: Wash Sale reporting with two brokers

Post by livesoft »

If you care to read an old thread about all this, then there is:

viewtopic.php?t=179414

Unfortunately, the image-hosting service no longer hosts the images.
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gobel
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Re: Wash Sale reporting with two brokers

Post by gobel »

LoveTheBogle wrote: Tue Sep 21, 2021 1:14 pm Below is organized according to purchase date rounded to nearest $5k. The sell date is all the same of March 17, 2020. I did not repurchase this symbol after selling.

Code: Select all

Purchase - Basis - Proceeds - Notes
2020/03/02 35,000 25,000
2020/03/03 50,000 35,000
2020/03/06 95,000 85,000 *1099-b says 8,000 wash sale loss disallowed
2020/03/06 15,000 10,000
2020/03/09 60,000 55,000 *broker 2 1099-b
How many shares were in each lot? The 1099b would make sense if the 3 smaller lots add up to 80% of the largest lot - because it looks like only about 80% of the loss was disallowed.

btw you should make sure that the 8k disallowed loss was added to the basis of those 3 lots correctly - ie. check that the reported basis here is actually higher than what you paid that day.

Technically, I guess the final 2k should also be disallowed and added onto the 5th transaction, but since you said that lot was also sold at the same time, and no other lots repurchased, it all nets out the same.
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iceport
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Re: Wash Sale reporting with two brokers

Post by iceport »

LoveTheBogle wrote: Tue Sep 21, 2021 1:14 pm
iceport wrote: Mon Sep 20, 2021 1:43 pm I don't know of any reliable calculators like that, but if you provide that data to us we could help you determine whether any wash sales were created. You can fictionalize the dollar values/number of shares involved, but they should be roughly representative of real life in terms of relative numbers of shares remaining vs. sold, replacement shares, etc. Most critical are all transactions within the 61-day wash sale period surrounding the sale date(s).
Below is organized according to purchase date rounded to nearest $5k. The sell date is all the same of March 17, 2020. I did not repurchase this symbol after selling.

Code: Select all

Purchase - Basis - Proceeds - Notes
2020/03/02 35,000 25,000 
2020/03/03 50,000 35,000 
2020/03/06 95,000 85,000 *1099-b says 8,000 wash sale loss disallowed
2020/03/06 15,000 10,000
2020/03/09 60,000 55,000 *broker 2 1099-b
Not enough info, LoveTheBogle. While not required to determine actual real life wash sales, we'd need the data separated out by brokerage, to track down the reason for the wash sale flag.

Which shares were sold in each sale, only old shares purchased before the wash sale period (starting on 2/1 for the first sale, for example), only the ones most recently purchased, or a combination? How many shares that were purchased within 30 days or less from the sale date were left in each account after each sale?

I think that should do it, but I reserve the right to ask for more if I'm missing something...

(I'm assuming you use specific ID of shares for the sales and for your cost basis method. Is that true?)
"Discipline matters more than allocation.” |—| "In finance, if you’re certain of anything, you’re out of your mind." ─William Bernstein
Topic Author
LoveTheBogle
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Joined: Tue Aug 13, 2019 5:53 pm

Re: Wash Sale reporting with two brokers

Post by LoveTheBogle »

I had some money on the sidelines that I used to purchase when March 2020 market started selling off. I purchased and then roughly a week to two weeks later I sold at a loss to tax loss harvest and purchased something else with the proceeds. My sell order was for 100% of the shares I had in my taxable accounts between two brokers.

In total at broker 1 I purchased 1300 shares in 4 transactions between three different dates (March 2, March 3 and two lots on March 6th). I then sold all 1300 shares on March 17th to tax loss harvest.
In total at broker 2 I purchased 500 shares on March 9th and sold 500 shares on March 17th to tax loss harvest.
I have not purchased this same symbol since March 17 2020.

Hope the above information and below table helps. All sold March 17, 2020. All short term capital gain with holding period of week to two weeks. No purchases within 31 days before and no purchases after March 17, 2020.

Code: Select all

Purchase - Qty - Basis - Proceeds - Loss -  Broker # - Notes
2020/03/02 200 35,000 25,000 -10,000 #1 
2020/03/03 300 50,000 35,000 -15,000 #1
2020/03/06 700 95,000 85,000 -10,000 #1 *1099-b says 8,000 wash sale loss disallowed
2020/03/06 100 15,000 10,000 -5,000 #1 
2020/03/09 500 60,000 55,000 -5,000 #2  *only broker 2 transaction.
Total loss: 45,000.
Shows "wash sale loss disallowed" on ONE transaction on broker 1 of $10,000.

I do not have any shares of this symbol in my taxable account except for some shares that are many years old. I did use spec id to sell the shares that were purchased in March 2020.
hachiko
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Re: Wash Sale reporting with two brokers

Post by hachiko »

For only 5 sales I think you can just utilize a trial of a trading software like tradelog, let them spit out the numbers, and be done with it.

Also, FYI: it's very unlikely that either of the statements you receive will be "correct" in the sense that they will show how you are supposed to report the sales on your return. So you can basically throw those out. (Not really throw them out, but you get the point)
Made money. Lost money. Learned to stop counting.
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iceport
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Re: Wash Sale reporting with two brokers

Post by iceport »

LoveTheBogle wrote: Tue Sep 21, 2021 4:37 pm I had some money on the sidelines that I used to purchase when March 2020 market started selling off. I purchased and then roughly a week to two weeks later I sold at a loss to tax loss harvest and purchased something else with the proceeds. My sell order was for 100% of the shares I had in my taxable accounts between two brokers.

In total at broker 1 I purchased 1300 shares in 4 transactions between three different dates (March 2, March 3 and two lots on March 6th). I then sold all 1300 shares on March 17th to tax loss harvest.
In total at broker 2 I purchased 500 shares on March 9th and sold 500 shares on March 17th to tax loss harvest.
I have not purchased this same symbol since March 17 2020.

Hope the above information and below table helps. All sold March 17, 2020. All short term capital gain with holding period of week to two weeks. No purchases within 31 days before and no purchases after March 17, 2020.

Code: Select all

Purchase - Qty - Basis - Proceeds - Loss -  Broker # - Notes
2020/03/02 200 35,000 25,000 -10,000 #1 
2020/03/03 300 50,000 35,000 -15,000 #1
2020/03/06 700 95,000 85,000 -10,000 #1 *1099-b says 8,000 wash sale loss disallowed
2020/03/06 100 15,000 10,000 -5,000 #1 
2020/03/09 500 60,000 55,000 -5,000 #2  *only broker 2 transaction.
Total loss: 45,000.
Shows "wash sale loss disallowed" on ONE transaction on broker 1 of $10,000.

I do not have any shares of this symbol in my taxable account except for some shares that are many years old. I did use spec id to sell the shares that were purchased in March 2020.
Okay, based on what you've provided, here's what I think happened.

To have a wash sale, the investor needs to hold "replacement shares" of substantially identical stock purchased within the wash sale period. By selling all the shares you owned on the same day, you effectively avoided a wash sale, because you had no shares left after the sales. All of your losses will (eventually) be able to be claimed.

However, due to the possible timing of the sales, as logged by broker1's computers, it seems as though what happened is that after one of the sales, you actually did still hold "replacement shares" — at least until the next sale went through. So the broker identifies it as a wash sale, and adds the disallowed loss to the cost basis of those replacement shares. Then, when those replacement shares are sold, you the disallowed loss becomes allowed, by virtue of the fact that the last sale is not a wash sale, and the the adjusted cost basis increases the amount of the loss you would have expected by exactly the amount of the loss disallowed in the wash sale. So it appears that you technically have a wash sale to report, but you're made whole after the last sale makes the previously disallowed loss allowable.

At least that's my best assessment, given what you've provided. You should be able to verify that by figuring out what the losses would all add up to at broker1 assuming there was no wash sale. Then add up the losses the broker actually reported. The totals should be the same, even if they arrive there along two different paths.

As for broker2, you don't have to worry about any seconds, minutes or hours between sales. At the end of the day, you held no replacement shares. So you don't have to bother with any wash sale reporting for the broker2 sale. (Even if the timing of the broker2 sale was later than the sales at broker1, I would never worry about something like that, because all it would entail is the same kind of accounting busywork described above, and the loss becomes allowable. But the brokers aren't going to know about it, so they won't report it, and at the end of the day, you're still left with no replacement shares and all losses allowable.)

There's an excellent collection of short articles about wash sales over at Fairmark.com: The Wash Sale Rule.

The first five of those short articles should be required reading for anyone doing TLH.
"Discipline matters more than allocation.” |—| "In finance, if you’re certain of anything, you’re out of your mind." ─William Bernstein
Katietsu
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Re: Wash Sale reporting with two brokers

Post by Katietsu »

I agree with iceport. It looks like you can just report as written on the 1099-B as long as it checks out.
FactualFran
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Re: Wash Sale reporting with two brokers

Post by FactualFran »

It may not be possible to describe in detail why there was a wash sale because the data posted here has been rounded to $5k multiples. The data indicate that the shares at broker 1 were sold at a range of prices, from 100 per share for the lot of 100 shares purchased on 2020/03/06 to 125 per share for the lot of 200 shares purchased on 2020/03/02. That is a wide range of prices for selling 1300 shares on the same day. The wash sale rules apply on a purchase lot by lot basis, rather than on the sum over all the purchase lots sold at the same time.

It is a good idea to not post actual portfolio values to a public forum. One way is to post values equal to the actual values divided by 10. That data should be precise enough for others to provide detailed answers while having it easy for you to convert back to the actual values.
hachiko
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Re: Wash Sale reporting with two brokers

Post by hachiko »

FactualFran wrote: Wed Sep 22, 2021 1:57 pm It may not be possible to describe in detail why there was a wash sale because the data posted here has been rounded to $5k multiples. The data indicate that the shares at broker 1 were sold at a range of prices, from 100 per share for the lot of 100 shares purchased on 2020/03/06 to 125 per share for the lot of 200 shares purchased on 2020/03/02. That is a wide range of prices for selling 1300 shares on the same day. The wash sale rules apply on a purchase lot by lot basis, rather than on the sum over all the purchase lots sold at the same time.

It is a good idea to not post actual portfolio values to a public forum. One way is to post values equal to the actual values divided by 10. That data should be precise enough for others to provide detailed answers while having it easy for you to convert back to the actual values.
Other than like general financial privacy, is there a reason not to post actual amounts? (I'm not saying OP should post actual amounts, just wanted to make sure I'm not missing something)
Made money. Lost money. Learned to stop counting.
FactualFran
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Re: Wash Sale reporting with two brokers

Post by FactualFran »

hachiko wrote: Wed Sep 22, 2021 4:41 pm Other than like general financial privacy, is there a reason not to post actual amounts? (I'm not saying OP should post actual amounts, just wanted to make sure I'm not missing something)
As far as I know, you are not missing something.
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