How to Calculate Wash SalesCalculating wash sales is not easy! The IRS expects you to record each and every wash sale throughout the tax year. For those of you who have ever tried to calculate wash sales for an entire year's worth of trade activity, we don't need to tell you just how painful this can be. First you need to identify trades that have been closed at a loss. Then you have to scan backwards and forwards in time to see if you re-purchased the same or "substantially the same" securities within a plus or minus 30 day window. If you did then, you need to record a wash sale adjustment line on your schedule d. You also need to adjust the cost basis of the re-purchase shares, moving the loss forward or backwards to this whatever trade triggered the wash sale. Does all of this sound complicated? It is if you plan on doing this by hand - see an example of Wash Sales Reported On Schedule D. But it gets even more complicated when you do not re-purchase an equal number of shares. Learn More... Wash Sales on Unequal Shares 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. |
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