Wash Sale Example - Wash Sales Deferred to Next Year
This following is a standard TradeLog
wash sale detail report which shows the trades that caused the wash sale deferral,
even though these trades were made in the next tax year (trades 9 & 10).
Note: You can always determine which trade triggered the wash sale by
examining the date of the wash sale. For example, the wash sale after
trade #3 has a date of 12/12/2000. Therefore, trade #8 with its date
acquired being 12/12/2000 is the re-purchase trade that actually triggered the
wash sale.
You can always determine when a wash sale is being deferred, as it's date is
dated greater than 12/31 of the current tax year, or the trade that triggered
the wash sale was held open at year end.
Gains & Losses - Wash Sale Adjusted - Tax Year 2000
|
(a) Desc of Property
(Example: 100 sh. XYZ Co.) |
(b) Date acq
(Mo., day, yr.) |
(c) Date Sold
(Mo., day, yr.) |
(d) Sales Price |
(e) Cost or
other basis |
(f) GAIN or (LOSS)
Subtract (e) from (d) |
| |
| 1) 400 sh. SNDK |
07/25/2000 |
09/11/2000 |
$31,924.98 |
$28,373.95 |
$3,551.03 |
| 2) 400 sh. SNDK |
07/26/2000 |
09/12/2000 |
$31,572.99 |
$28,100.95 |
$3,472.04 |
| 3) 1000 sh. SNDK |
10/06/2000 |
12/29/2000 |
$27,614.50
|
$65,775.95
|
($38,161.45) |
| Wash Sale Adj - 1000 sh. |
12/12/2000 |
|
|
($38,161.45) |
$38,161.45 |
| 4) 189 sh. SNDK |
10/24/2000 |
12/29/2000 |
$5,219.14
|
$10,916.75
|
($5,697.61) |
| Wash Sale Adj - 189 sh. |
01/02/2001 |
|
|
($5,697.61) |
$5,697.61 |
| 5) 250 sh. SNDK |
10/24/2000 |
12/29/2000 |
$6,903.62
|
$14,449.22
|
($7,545.60) |
| Wash Sale Adj - 250 sh. |
01/02/2001 |
|
|
($7,545.60) |
$7,545.60 |
| 6) 61 sh. SNDK |
10/24/2000 |
12/29/2000 |
$1,684.48
|
$3,550.51
|
($1,866.03) |
| Wash Sale Adj - 61 sh. |
01/02/2001 |
|
|
($1,866.03) |
$1,866.03 |
| 7) 1000 sh. SNDK |
11/10/2000 |
12/29/2000 |
$27,614.50
|
$53,713.45
|
($26,098.95) |
| Wash Sale Adj - 1000 sh. |
01/02/2001 |
|
|
($26,098.95) |
$26,098.95 |
| 8) 1000 sh. SNDK |
12/12/2000 |
12/29/2000 |
$27,662.62
|
$103,499.90
|
($75,837.28) |
| Wash Sale Adj - 500 sh. |
01/02/2001 |
|
|
($37,918.64) |
$37,918.64 |
| Wash Sale Adj - 500 sh. |
01/02/2001 |
|
|
($37,918.64) |
$37,918.64 |
| 9) 2000 sh. SNDK - OPEN |
01/02/2001 |
|
$58,525.95
|
$137,652.78
|
($79,126.83) |
| 10) 2000 sh. SNDK - OPEN |
01/02/2001 |
|
$57,148.95
|
$95,067.59
|
($37,918.64) |
| |
| |
|
TOTALS: |
$366,697.58 |
$476,719.98 |
($110,022.40) |
| |
|
| TOTAL WASH SALES DEFERRED
TO NEXT TAX YEAR: |
($117,045.47) |
- Please notice that on December 29, 2000 he proceeded to liquidate
3500 shares of SNDK all at a loss (trades 3-8 highlighted in red).
- Each of these trades generated a string of wash sales that eventually
moved forward and attached themselves to the 4000 shares purchased on January 2
(trades 9 & 10 highlighted in blue). A total of $117,045.47 worth of
losses were "disallowed" due to the IRS wash rule.
- Therefore an actual loss of ($110,022.40) became a short term capital gain for tax year 2000 in the amount of $7,023.07.
- Taxes had to be paid on this amount even though he actually lost $110,022 for the year. Ouch!
The actual Gains & Losses report as attached to his schedule d and filed with
his taxes return is shown below:
Gains & Losses - Wash Sale Adjusted - Tax Year 2000
|
(a) Desc of Property
(Example: 100 sh. XYZ Co.) |
(b) Date acq
(Mo., day, yr.) |
(c) Date Sold
(Mo., day, yr.) |
(d) Sales Price |
(e) Cost or
other basis |
(f) GAIN or (LOSS)
Subtract (e) from (d) |
| |
| 1) 400 sh. SNDK |
07/25/2000 |
09/11/2000 |
$31,924.98 |
$28,373.95 |
$3,551.03 |
| 2) 400 sh. SNDK |
07/26/2000 |
09/12/2000 |
$31,572.99 |
$28,100.95 |
$3,472.04 |
| 3) 1000 sh. SNDK |
10/06/2000 |
12/29/2000 |
$27,614.50
|
$65,775.95
|
($38,161.45) |
| Wash Sale Adj - 1000 sh. |
12/12/2000 |
|
|
($38,161.45) |
$38,161.45 |
| 4) 189 sh. SNDK |
10/24/2000 |
12/29/2000 |
$5,219.14
|
$10,916.75
|
($5,697.61) |
| Wash Sale Adj - 189 sh. |
01/02/2001 |
|
|
($5,697.61) |
$5,697.61 |
| 5) 250 sh. SNDK |
10/24/2000 |
12/29/2000 |
$6,903.62
|
$14,449.22
|
($7,545.60) |
| Wash Sale Adj - 250 sh. |
01/02/2001 |
|
|
($7,545.60) |
$7,545.60 |
| 6) 61 sh. SNDK |
10/24/2000 |
12/29/2000 |
$1,684.48
|
$3,550.51
|
($1,866.03) |
| Wash Sale Adj - 61 sh. |
01/02/2001 |
|
|
($1,866.03) |
$1,866.03 |
| 7) 1000 sh. SNDK |
11/10/2000 |
12/29/2000 |
$27,614.50
|
$53,713.45
|
($26,098.95) |
| Wash Sale Adj - 1000 sh. |
01/02/2001 |
|
|
($26,098.95) |
$26,098.95 |
| 8) 1000 sh. SNDK |
12/12/2000 |
12/29/2000 |
$27,662.62
|
$103,499.90
|
($75,837.28) |
| Wash Sale Adj - 500 sh. |
01/02/2001 |
|
|
($37,918.64) |
$37,918.64 |
| Wash Sale Adj - 500 sh. |
01/02/2001 |
|
|
($37,918.64) |
$37,918.64 |
| |
| |
|
TOTALS: |
$160,196.83 |
$153,173.76 |
$7,023.07 |
| |
|
| TOTAL WASH SALES DEFERRED
TO NEXT TAX YEAR: |
($117,045.47) |
This is by no means an isolated example, as we see data files with wash sale deferrals like this all the time.
However, using TradeLog software you can spot these in December and take corrective action before it is to late
Learn More... Common Tax Software and Wash Sales
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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