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 it's 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 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 sales 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

Please see: Wash Sales: How to avoid