Tax reporting of gains/losses for sale on one date but mutliple purchase dates (plus wash sale rules)

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Topic Author
water2357
Posts: 654
Joined: Sat Sep 12, 2020 9:24 am

Tax reporting of gains/losses for sale on one date but mutliple purchase dates (plus wash sale rules)

Post by water2357 »

If all of the shares held of a mutual fund are sold on the same date, but the shares were purchased over multiple years from pre 2012 to current, using the average cost method, how many gains/losses must be reported separately to the IRS and how many gains/losses are looked at separately for wash sale rules?

E.g. Total shares owned of mutual fund, 1000, sold for $25 per share today
Total shares purchased pre 2012 500, with average cost pre 2012 of $10 per share -- long term
Total shares purchased post 2012 at least one year before sale, 400, with average cost $20 per share -- long term
Total shares purchased post 2012 within one year of sale but not within last 30(31) days, 100, with average cost $30 per share
-- short term

First for determining long term and short term gains and losses have I split up the 1000 shares into the correct average cost buckets? And if I have, then can each of these buckets be shown with the purchases listed as "various dates" or must the purchase dates be listed more specifically and if so how?

If shares of this same mutual fund were then somehow inadvertently purchased within 30(31) days after the sale, what loss would be disallowed? Would it be the entire short term loss? Or something else? Would the long term gains be impacted?

Someone mentioned on an earlier post that you could not take the loss for that tax year and would have to adjust your cost basis. But I'm not at all clear on just exactly what portion of the sale is impacted and what portions of the sale are then reported?

If no one can add any insight on the potential wash sale reporting, it would be very helpful if someone could provide insight on reporting the sale assuming there is no wash sale. Thanks.
FactualFran
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Joined: Sat Feb 21, 2015 1:29 pm

Re: Tax reporting of gains/losses for sale on one date but mutliple purchase dates (plus wash sale rules)

Post by FactualFran »

There will be only two average basis values: one for shares purchased pre 2012 and one for shares purchased in or after 2012. Because the double category average basis method was eliminated years ago, shares acquired up to one year before the sale cannot have their own average basis.

Up to three gains/losses will be reported on an income tax return, and possibly use a purchase date of "VARIOUS": long-term for shares acquired before 2012, long-term for shares acquired in or after 2012 but more than one year before the sale, and short-term for shares acquired up to one year before the sale.

Based on the sale proceeds of $25 per share in the example given, purchasing shares 30 days after the sale of all the previous shares will not result in a wash sale unless the average basis per share of all shares acquired in or after 2021 is more than $25. In that case, the loss disallowed, and added to the cost or basis on the newly acquired shares, will be loss multiplied by the number of newly acquired shares divided by the number of shares sold that were acquired in or after 2012.
Topic Author
water2357
Posts: 654
Joined: Sat Sep 12, 2020 9:24 am

Re: Tax reporting of gains/losses for sale on one date but mutliple purchase dates (plus wash sale rules)

Post by water2357 »

Thank you for clarifying the cost basis and reporting on the sale of a mutual fund holding and for the additional information on the wash sale rules.
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