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Wash Sales on Schedule D

But wait, because there were some loss trades which were bought back within the 30 day window, shouldn't there be some wash sales?  You are correct, and these wash trades need to have wash sale adjustments.  Can you figure out how to make the necessary wash sales entries on your schedule d as well as adjusting the cost basis of the trades causing the wash sales?  Please take a close look at the following:

(a) Description of property (b) Date acquired (c) Date sold (d) Sales price (e) Cost or other basis (f) Gain (or loss)
1) 50 sh. MSFT 01/05/2008 01/08/2008 $1,300.00 $1,250.00 $50.00
2) 35 sh. MSFT 01/05/2008 01/08/2008 $840.00 $875.00 ($35.00)
 Wash Sale Adj - 15 sh. 01/05/2008     ($15.00) $15.00
 Wash Sale Adj - 20 sh. 01/06/2008     ($20.00) $20.00
3) 15 sh. MSFT 01/05/2008 01/08/2008 $345.00 $390.00 ($45.00)
 Wash Sale Adj - 15 sh. 01/06/2008     ($45.00) $45.00
4) 50 sh. MSFT 01/06/2008 01/08/2008 $1,150.00 $1,265.00 ($115.00)
 Wash Sale Adj - 50 sh. 01/06/2008     ($115.00) $115.00
5) 60 sh. MSFT 01/06/2008 01/09/2008 $1,680.00 $1,495.00 $185.00
6) 15 sh. MSFT 01/06/2008 01/09/2008 $435.00 $345.00 $90.00
7) 25 sh. MSFT 01/06/2008 01/09/2008 $725.00 $550.00 $175.00
    Totals: $6,475.00 $5,975.00 $500.00

This also took less than 1 second for TradeLog™ to generate.

Please notice that the loss on trade #2 had two different trades where shares were repurchased within 30 days.  This caused two wash sale adjustments and adjusted the cost basis of trades # 3 and 4.  In addition, the left over 30 shares of trade #4 triggered still another wash sale adjustment on the 15 shares from trade #3.  Please note that all of this moving forward of wash sale adjustments had no affect on your bottom line. 

But what if this sequence had occurred at year end with trades 5-7 being completed in Jan of 2008? Please see our discussion: Wash Sales: How they affect me.



Please note: This information is provided only as a general guide and is not to be taken as official IRS instructions. Armen Computing Ltd. does not make investment recommendations nor provide financial, tax or legal advice. You are solely responsible for your investment and tax reporting decisions. Please consult your tax advisor or accountant to discuss your specific situation.