Security Wash Sale

NotACPA

Any idea how to record this in Q?

q_lurker

This includes my most recent thoughts

https://community.quicken.com/discussion/7887205/wash-sales

q_lurker

There is a companion aspect to that question - How to record?

What are you trying to accomplish by so recording the wash sale considerations in Quicken?

If you are trying to have your Quicken cap gains report match the brokers, you need to adjust down the basis of the sold shares (the specific lot sold associated with the wash). Then that sale will show $0 gain/loss instead of the real world loss. That adjustment (as I see it) is a Remove Shares / Add Shares pairing.

If you are trying to increase the cost of the bought shares associated with the loss, you need to increase the basis of those bought shares by that disallowed loss. That adjustment (as I see it) is a different Remove Shares / Add Shares pairing. I believe those sold shares also get the advantage of taking on the acquisition date from the sold shares whose loss was disallowed. That too can be accomplished through the Add Shares part.

One might want to one part or the other or both.

NotACPA

@q_lurker I'm the Treasurer of a club that's a chapter of a national organization. Each year we're required to report our finances to the National Office since we use their tax ID number and they provide almost all of our funding.

Some time back there was a wash sale in our investment account … which I regularly forget about until I'm doing that annual report. That makes the Balance sheet portion of the report a pain until I remember it. It's a pain because Q's numbers differ from those of Fidelity, and I'd rather just rely on Q to produce the figures that I need.

SO, I decided to finally get around to correcting this.

q_lurker

This year my FI reported one wash sale to me on their 1099-B. I see this perhaps once every five years or so. That got me looking more closely at wash sales and I found the FI also messed up on the application of it. While they identified the sale as a wash sale and zeroed out the loss, they did not apply the credit for the loss to the basis of the ongoing shares. As I understand the rules, one is not getting the credit for the loss at the time of the wash, but you do effectively get that credit later. All that led me to the two Remove/Add pairings. I am not absolute about that, but is seems to be OK at this point.

The sequence was

• 7/24/23 Bought 590 shares
• 8/21/23 Sold 440 shares - ST Loss
  • Therefore wash sale
  • Therefore loss disallowed
• 8/30/23 Sold balance of shares (150)

So for Quicken, I

• 8/21/23
  • Removed and Added 440 of 590 shares (7/24/23 lot) dropping the basis by the amount of the disallowed loss. That is changing the cost per share from the original price to the price when sold (8/21/23).
  • Sold the 440 shares yielding a no gain/no loss transaction ($X disallowed)
  • Removed and Added the 150 remaining shares with the disallowed loss ($X) added to original basis
• 8/30/23
  • Sold the remaining 150 shares
    • Since their basis was more than their original (7/24/23) cost (by $X), I had less gain (or more loss) than if the wash sale rules were not in place. Effectively, while I did not get the loss on 8/21/23, I did get it on 8/30/23. So the wash sale was a wash. Much ado about nothing in this case.

There are a variety of other circumstances that can cause the wash sale rules to come into play. At this point, I think each case needs to be individually thought out and worked through.