Brokers calculate wash sales based on identical positions (an exact symbol only) per separate brokerage account. Many tax preparers and taxpayers continue to disregard Section 1091 rules, even after acknowledging differences with broker 1099-B rules. They do so at their peril if caught by the IRS.
How do I fix my wash sale?
You can either buy something else that is not substantially identical or wait beyond the 30-day window to repurchase the shares. (You still have a wash-sale on the original sale and repurchase. You realize the loss on the subsequent sale.)
Should I worry about wash sales?
However it happens, when you sell an investment at a loss, it’s important to avoid replacing it with a “substantially identical” investment 30 days before or 30 days after the sale date. It’s called the wash-sale rule and running afoul of it can lead to an unexpected tax bill.
What happens if I sell a wash sale?
The wash-sale rule prohibits selling an investment for a loss and replacing it with the same or a “substantially identical” investment 30 days before or after the sale. If you do have a wash sale, the IRS will not allow you to write off the investment loss which could make your taxes for the year higher than you hoped.
Does a wash sale really matter?
The result of a wash sale is that your loss will be disallowed for tax purposes and added to the cost basis of the securities you repurchased. This can make filing your taxes more of a hassle, but usually has little effect on the overall investment strategy of your account.
Does a wash sale hurt you?
Wash sales may result in losses deferred to the next tax year. Wash sales triggered by IRA trades are always harmful. The IRS has special rules for IRA trades which trigger a wash sale in a taxable account. Rather than deferring the loss to a future date, the IRS says the loss is permanently disallowed.
