Selling All Lots of Individual Stock In One Go - Tax?

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keyfort
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Selling All Lots of Individual Stock In One Go - Tax?

Post by keyfort »

I couldn't find a totally clear answer to this so I wanted to see what everyone says here.

If I bought shares of an individual company's stock (I know, I've learned my lesson) in various different lots across different days, for example:

4/1/2021 - Buy 100 shares at $40
4/2/2021 - Buy 60 shares at $35
4/3/2021 - Buy 120 shares at $25

And then on 5/5/2021 I sold all 280 shares at once in one transaction at a share price of for example $37 for which there was a net profit, how are the short term capital gains and tax calculated?

Is it by average cost basis across all lots since I sold my entire holding in one go?

Or will I eventually see on a 1099 the three different lots, where one lot will show a loss and the other two lots will have gains in this case? At the moment the realized gain/loss column at my brokerage shows only the net profit but I can go in and see the trades behind it.

This, among many other things, I should have looked into before getting into it. Anyway, thank you for your help.
livesoft
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Re: Selling All Lots of Individual Stock In One Go - Tax?

Post by livesoft »

Do the math:
1. What did you pay for all the shares combined?
2. What did you sell all the shares for combined?
3. What is the difference?

Individual stocks do not use average cost basis, but math does not lie.
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Tubes
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Re: Selling All Lots of Individual Stock In One Go - Tax?

Post by Tubes »

"Various" should help simplify tax reporting -- all as short term.
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Re: Selling All Lots of Individual Stock In One Go - Tax?

Post by Swivelguy »

Your 1099-B will show the individual lots.
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Re: Selling All Lots of Individual Stock In One Go - Tax?

Post by RickBoglehead »

Keep in mind that since all are short term, it doesn't make a difference.

If there is a net profit of $200, that's the same as a gain of $400 combined with a loss of $100 and a loss of $100.

If some were short term, and some were long term, then they are treated differently.
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Re: Selling All Lots of Individual Stock In One Go - Tax?

Post by investorpeter »

The 1099-B will show the individual short-term gains and losses for each lot.

But the 1099-B will also usually sum up all of those lots into a net short term gain or loss for that particular stock.

When calculating your capital gain tax, it doesn't matter whether you use average cost basis for all lots, or individual cost basis for each lot. The tax amount will come out the same either way.

So for convenience, most people would just report the net short-term gain or loss for all lots for that stock, using "various" for the dates.

In the case you described, you would just report:

Bought 280 shares with total cost basis of $xxx.xx on various dates; Sold 280 shares with proceeds of $xxx.xx on mm/dd/yyyy

Out of curiosity, which stock was it? If there are significant gains, it may be worth considering holding until they are long-term gains.
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Re: Selling All Lots of Individual Stock In One Go - Tax?

Post by humblecoder »

keyfort wrote: Thu May 06, 2021 4:05 am If I bought shares of an individual company's stock (I know, I've learned my lesson) in various different lots across different days, for example:

4/1/2021 - Buy 100 shares at $40
4/2/2021 - Buy 60 shares at $35
4/3/2021 - Buy 120 shares at $25

And then on 5/5/2021 I sold all 280 shares at once in one transaction at a share price of for example $37 for which there was a net profit, how are the short term capital gains and tax calculated?
You are overthinking it.

You bought 280 for a total of $9,100.

You sold those shares for a total of $10,360,

Your total profit is $1,260.

You pay taxes on $1,260.

Since you held the shares for less than a year, that $1,260 is added to your income and taxed at the ordinary rate.

Your 1099-B should reflect all of this.
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keyfort
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Re: Selling All Lots of Individual Stock In One Go - Tax?

Post by keyfort »

humblecoder wrote: Thu May 06, 2021 7:30 am
keyfort wrote: Thu May 06, 2021 4:05 am If I bought shares of an individual company's stock (I know, I've learned my lesson) in various different lots across different days, for example:

4/1/2021 - Buy 100 shares at $40
4/2/2021 - Buy 60 shares at $35
4/3/2021 - Buy 120 shares at $25

And then on 5/5/2021 I sold all 280 shares at once in one transaction at a share price of for example $37 for which there was a net profit, how are the short term capital gains and tax calculated?
You are overthinking it.

You bought 280 for a total of $9,100.

You sold those shares for a total of $10,360,

Your total profit is $1,260.

You pay taxes on $1,260.

Since you held the shares for less than a year, that $1,260 is added to your income and taxed at the ordinary rate.

Your 1099-B should reflect all of this.
investorpeter wrote: Thu May 06, 2021 7:10 am The 1099-B will show the individual short-term gains and losses for each lot.

But the 1099-B will also usually sum up all of those lots into a net short term gain or loss for that particular stock.

When calculating your capital gain tax, it doesn't matter whether you use average cost basis for all lots, or individual cost basis for each lot. The tax amount will come out the same either way.

So for convenience, most people would just report the net short-term gain or loss for all lots for that stock, using "various" for the dates.

In the case you described, you would just report:

Bought 280 shares with total cost basis of $xxx.xx on various dates; Sold 280 shares with proceeds of $xxx.xx on mm/dd/yyyy

Out of curiosity, which stock was it? If there are significant gains, it may be worth considering holding until they are long-term gains.
I think I'm missing some fundamental understanding, but the reason I'm wondering about it is:

(By the way these are all short term gain/loss)

If I've already used up the $3000 capital loss I can write off against income, then if the 1099 breaks all the lots down, I won't be able to use the loss from the lots that actually did sell for a loss, to offset the gains from the lots that sold for a gain, if you see what I mean.

If it's short term gain/loss of individual stock, can you deduct the loss from the gain for tax purposes whether or not you've reached the $3000 capital loss write off already from another source?
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Re: Selling All Lots of Individual Stock In One Go - Tax?

Post by TropikThunder »

keyfort wrote: Thu May 06, 2021 11:19 am If I've already used up the $3000 capital loss I can write off against income, then if the 1099 breaks all the lots down, I won't be able to use the loss from the lots that actually did sell for a loss, to offset the gains from the lots that sold for a gain, if you see what I mean.

If it's short term gain/loss of individual stock, can you deduct the loss from the gain for tax purposes whether or not you've reached the $3000 capital loss write off already from another source?
I don’t see how it would matter since it’s all counted as regular income. Whether you’re offsetting $3,000 of salary vs $2,000 of salary + $1,000 of capital gains the result is the same.
humblecoder
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Re: Selling All Lots of Individual Stock In One Go - Tax?

Post by humblecoder »

keyfort wrote: Thu May 06, 2021 11:19 am
humblecoder wrote: Thu May 06, 2021 7:30 am You are overthinking it.

You bought 280 for a total of $9,100.

You sold those shares for a total of $10,360,

Your total profit is $1,260.

You pay taxes on $1,260.

Since you held the shares for less than a year, that $1,260 is added to your income and taxed at the ordinary rate.

Your 1099-B should reflect all of this.
I think I'm missing some fundamental understanding, but the reason I'm wondering about it is:

(By the way these are all short term gain/loss)

If I've already used up the $3000 capital loss I can write off against income, then if the 1099 breaks all the lots down, I won't be able to use the loss from the lots that actually did sell for a loss, to offset the gains from the lots that sold for a gain, if you see what I mean.

If it's short term gain/loss of individual stock, can you deduct the loss from the gain for tax purposes whether or not you've reached the $3000 capital loss write off already from another source?
Again, you are overthinking this.

I think where you are getting lost is that you are under the impression that you can only use $3000 of losses to offset gains. That is not correct. You can offset gains with losses with no limit. However, if your total losses exceed your total gains by more than $3000, you can only subtract $3000 from your income for that year. I believe the rest gets carried over into future years, meaning that you can use the carried over loss to offset gains in a future year.

So if you have $10,000 in gains and $10,000 in losses, you can offset all of those gains with your losses; your net cap gains is $0.

If you have $10,000 in gains and $12,000 in losses, you have a net loss of $2000 which you can deduct from your income for that year.

However, if you have $10,000 in gains and $15,000 in losses, even though you have a net cap loss of $5,000, you can only subtract $3000 from your income for that year. The remaining $2000 in loss gets carried over and can be used to offset a gain in a future year.

This IRS link has a good explanation (https://www.irs.gov/taxtopics/tc409):
If your capital losses exceed your capital gains, the amount of the excess loss that you can claim to lower your income is the lesser of $3,000 ($1,500 if married filing separately) or your total net loss shown on line 21 of Schedule D (Form 1040). Claim the loss on line 6 of your Form 1040 or Form 1040-SR. If your net capital loss is more than this limit, you can carry the loss forward to later years. You may use the Capital Loss Carryover Worksheet found in Publication 550, Investment Income and Expenses or in the Instructions for Schedule D (Form 1040) PDF to figure the amount you can carry forward.
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keyfort
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Re: Selling All Lots of Individual Stock In One Go - Tax?

Post by keyfort »

humblecoder wrote: Thu May 06, 2021 11:45 am
keyfort wrote: Thu May 06, 2021 11:19 am
humblecoder wrote: Thu May 06, 2021 7:30 am You are overthinking it.

You bought 280 for a total of $9,100.

You sold those shares for a total of $10,360,

Your total profit is $1,260.

You pay taxes on $1,260.

Since you held the shares for less than a year, that $1,260 is added to your income and taxed at the ordinary rate.

Your 1099-B should reflect all of this.
I think I'm missing some fundamental understanding, but the reason I'm wondering about it is:

(By the way these are all short term gain/loss)

If I've already used up the $3000 capital loss I can write off against income, then if the 1099 breaks all the lots down, I won't be able to use the loss from the lots that actually did sell for a loss, to offset the gains from the lots that sold for a gain, if you see what I mean.

If it's short term gain/loss of individual stock, can you deduct the loss from the gain for tax purposes whether or not you've reached the $3000 capital loss write off already from another source?
Again, you are overthinking this.

I think where you are getting lost is that you are under the impression that you can only use $3000 of losses to offset gains. That is not correct. You can offset gains with losses with no limit. However, if your total losses exceed your total gains by more than $3000, you can only subtract $3000 from your income for that year. I believe the rest gets carried over into future years, meaning that you can use the carried over loss to offset gains in a future year.

So if you have $10,000 in gains and $10,000 in losses, you can offset all of those gains with your losses; your net cap gains is $0.

If you have $10,000 in gains and $12,000 in losses, you have a net loss of $2000 which you can deduct from your income for that year.

However, if you have $10,000 in gains and $15,000 in losses, even though you have a net cap loss of $5,000, you can only subtract $3000 from your income for that year. The remaining $2000 in loss gets carried over and can be used to offset a gain in a future year.

This IRS link has a good explanation (https://www.irs.gov/taxtopics/tc409):
If your capital losses exceed your capital gains, the amount of the excess loss that you can claim to lower your income is the lesser of $3,000 ($1,500 if married filing separately) or your total net loss shown on line 21 of Schedule D (Form 1040). Claim the loss on line 6 of your Form 1040 or Form 1040-SR. If your net capital loss is more than this limit, you can carry the loss forward to later years. You may use the Capital Loss Carryover Worksheet found in Publication 550, Investment Income and Expenses or in the Instructions for Schedule D (Form 1040) PDF to figure the amount you can carry forward.
Ahhh ok, I think I'm beginning to see what I was missing.

So short term stock gains and losses count against each other under capital gains or losses, since they're in their own category, and then if you have a total net capital loss over $3000, you can take a maximum of $3000 off your income and carry over the rest to future years.

I guess I didn't explain very well, but the reason I was asking specifically about the $3000 limit is that I have an old investment I can't exit (and I know how bad this sounds, I've really learned my lesson on this) which is making a loss of about $3000/year already.

But capital gains / losses are a separate thing entirely from income. That was my lack of understanding..

Thank you for your time writing out the explanations.

Now I think about it, the reason I hadn't seen this before is I hadn't had a year with realized capital gains of any significant amount - only losses. So they were being applied against my income up to the $3000 limit.
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keyfort
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Re: Selling All Lots of Individual Stock In One Go - Tax?

Post by keyfort »

investorpeter wrote: Thu May 06, 2021 7:10 am The 1099-B will show the individual short-term gains and losses for each lot.

But the 1099-B will also usually sum up all of those lots into a net short term gain or loss for that particular stock.

When calculating your capital gain tax, it doesn't matter whether you use average cost basis for all lots, or individual cost basis for each lot. The tax amount will come out the same either way.

So for convenience, most people would just report the net short-term gain or loss for all lots for that stock, using "various" for the dates.

In the case you described, you would just report:

Bought 280 shares with total cost basis of $xxx.xx on various dates; Sold 280 shares with proceeds of $xxx.xx on mm/dd/yyyy

Out of curiosity, which stock was it? If there are significant gains, it may be worth considering holding until they are long-term gains.
Btw, I'm sorry I didn't say which stock. I'm too embarrassed at my deviation from what I should be doing (indexing) to say.. it's not much of a net gain in any case and I wish I'd stuck to what I was doing since it performed better than this stock!
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Re: Selling All Lots of Individual Stock In One Go - Tax?

Post by helloeveryone »

keyfort wrote: Thu May 06, 2021 11:57 am
investorpeter wrote: Thu May 06, 2021 7:10 am The 1099-B will show the individual short-term gains and losses for each lot.

But the 1099-B will also usually sum up all of those lots into a net short term gain or loss for that particular stock.

When calculating your capital gain tax, it doesn't matter whether you use average cost basis for all lots, or individual cost basis for each lot. The tax amount will come out the same either way.

So for convenience, most people would just report the net short-term gain or loss for all lots for that stock, using "various" for the dates.

In the case you described, you would just report:

Bought 280 shares with total cost basis of $xxx.xx on various dates; Sold 280 shares with proceeds of $xxx.xx on mm/dd/yyyy

Out of curiosity, which stock was it? If there are significant gains, it may be worth considering holding until they are long-term gains.
Btw, I'm sorry I didn't say which stock. I'm too embarrassed at my deviation from what I should be doing (indexing) to say.. it's not much of a net gain in any case and I wish I'd stuck to what I was doing since it performed better than this stock!
It's all good you learned a lesson by making money off stocks.
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Re: Selling All Lots of Individual Stock In One Go - Tax?

Post by grabiner »

keyfort wrote: Thu May 06, 2021 4:05 am 4/1/2021 - Buy 100 shares at $40
4/2/2021 - Buy 60 shares at $35
4/3/2021 - Buy 120 shares at $25

And then on 5/5/2021 I sold all 280 shares at once in one transaction at a share price of for example $37 for which there was a net profit, how are the short term capital gains and tax calculated?

Is it by average cost basis across all lots since I sold my entire holding in one go?
You cannot use average cost basis for a stock. This doesn't matter here, because all your gains are short-term, so they will be the same whatever basis you used.

However, if you use average basis for a mutual fund, the gain or loss per share would be the same on both short-term and long-term gains. For example:

March 2019: bought 100 shares at $40
April 2021: bought 100 shares at $50
May 2021: sold all 200 shares at $55

If you use specific identification of shares, you have a $1500 long-term gain on the 2019 shares, and a $500 short-term gain on the 2021 shares. If you use average basis, you have a basis of $45 on all 200 shares, so you have a $1000 long-term gain and a $1000 short-term gain. Your total gain is $2000 either way, but it may be taxed differently.
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Re: Selling All Lots of Individual Stock In One Go - Tax?

Post by Hyperchicken »

Others have covered taxation aspect, and I have nothing to add there.

I want to focus on tax reporting. It is simpler than many people think.

You do not need to list individual transactions in your tax return. You only need to report the grand total of all the transactions. Okay, you actually report two numbers - short term and long term totals, on lines 1a and 8a of schedule D. This is really simple.
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Re: Selling All Lots of Individual Stock In One Go - Tax?

Post by Tubes »

Hyperchicken wrote: Thu May 06, 2021 11:14 pm Others have covered taxation aspect, and I have nothing to add there.

I want to focus on tax reporting. It is simpler than many people think.

You do not need to list individual transactions in your tax return. You only need to report the grand total of all the transactions. Okay, you actually report two numbers - short term and long term totals, on lines 1a and 8a of schedule D. This is really simple.
Yes, exactly. "Various" is our friend.

I think a lot of us have been around a while and remember the days of digging up old, yellow and dusty trading confirmations to obtain basis lot by lot. Heck, even if they were not yellowed and dusty, you still had to find them for recent (within a year) transactions.

But with the change in the law, any trade done in recent years (they call them "covered shares") are all reported on the the 1099-B in full and are a simple matter to handle on the tax return.
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Re: Selling All Lots of Individual Stock In One Go - Tax?

Post by diy60 »

I've been using "various" for years, which cuts down on the effort significantly. However, this year I had a 1099-B with quite a few "non-reported" transactions, I think they may have been related to RSU's transferred from another custodian. I also had some "wash sales", which I had to list each transaction separately.
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Re: Selling All Lots of Individual Stock In One Go - Tax?

Post by Tubes »

Yes, wash sales are another matter, and the 1099-B will indicate this, if it is a covered share. Then you go down that rabbit hole.

OP seemed to intentionally pick a scenario to avoid wash sales, which they would have had if they sold a few days earlier in the scenario at that price.

Transfers from another brokerage should include the covered-share basis, unless it was an older purchase. Of course, many of us here like to hold long so a lot of us still have non-covered shares. I have a ton in my Vanguard account.

More info from Vanguard about covered and non-covered here: https://investor.vanguard.com/taxes/cos ... noncovered
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Re: Selling All Lots of Individual Stock In One Go - Tax?

Post by keyfort »

Tubes wrote: Fri May 07, 2021 7:08 am Yes, wash sales are another matter, and the 1099-B will indicate this, if it is a covered share. Then you go down that rabbit hole.

OP seemed to intentionally pick a scenario to avoid wash sales, which they would have had if they sold a few days earlier in the scenario at that price.

Transfers from another brokerage should include the covered-share basis, unless it was an older purchase. Of course, many of us here like to hold long so a lot of us still have non-covered shares. I have a ton in my Vanguard account.

More info from Vanguard about covered and non-covered here: https://investor.vanguard.com/taxes/cos ... noncovered
Oh I just realized that I put those dates in somewhat arbitrarily, and in fact I'm sure that I sold out my entire position before 30 days had elapsed from my last purchase.

If I had written the dates of all those purchases as one week before selling, would it make a difference to the overall net short term gain/loss?! I.e. would I not be allowed to deduct the lots which made a loss from the ones that made a gain?
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Re: Selling All Lots of Individual Stock In One Go - Tax?

Post by Tubes »

keyfort wrote: Fri May 07, 2021 2:45 pm
Tubes wrote: Fri May 07, 2021 7:08 am Yes, wash sales are another matter, and the 1099-B will indicate this, if it is a covered share. Then you go down that rabbit hole.

OP seemed to intentionally pick a scenario to avoid wash sales, which they would have had if they sold a few days earlier in the scenario at that price.

Transfers from another brokerage should include the covered-share basis, unless it was an older purchase. Of course, many of us here like to hold long so a lot of us still have non-covered shares. I have a ton in my Vanguard account.

More info from Vanguard about covered and non-covered here: https://investor.vanguard.com/taxes/cos ... noncovered
Oh I just realized that I put those dates in somewhat arbitrarily, and in fact I'm sure that I sold out my entire position before 30 days had elapsed from my last purchase.

If I had written the dates of all those purchases as one week before selling, would it make a difference to the overall net short term gain/loss?! I.e. would I not be allowed to deduct the lots which made a loss from the ones that made a gain?
OK, let's say you sold them on 04/29/21 for $37. Since you bought identical shares within the previous thirty days (4/2 an 4/3), your sale of the 4/1 lot was at a $3 per share loss, and is a wash sale.

Here's where I throw up my hands and hope someone else can answer. Since you sold it all and don't have any more holdings in this tax year, I'm not sure what other rules apply here which *may* make the wash a non-event. I don't know. I avoid wash sales like the plague because they complicate life in ways I don't need in retirement. :happy
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Re: Selling All Lots of Individual Stock In One Go - Tax?

Post by grabiner »

Tubes wrote: Sat May 08, 2021 8:25 am OK, let's say you sold them on 04/29/21 for $37. Since you bought identical shares within the previous thirty days (4/2 an 4/3), your sale of the 4/1 lot was at a $3 per share loss, and is a wash sale.

Here's where I throw up my hands and hope someone else can answer. Since you sold it all and don't have any more holdings in this tax year, I'm not sure what other rules apply here which *may* make the wash a non-event. I don't know. I avoid wash sales like the plague because they complicate life in ways I don't need in retirement. :happy
If you sell all shares bought in the last 30 days, you may have a wash sale, but it won't affect your capital loss because you sold the replacement shares.

This is what I call an irrelevant wash sale. In the example above:

4/1/2021 - Buy 100 shares at $40
4/2/2021 - Buy 60 shares at $35
4/3/2021 - Buy 120 shares at $25
4/29/2021 - Sell 280 shares at $37

Ignoring the wash sale rule, you would have a capital loss of $300 on the 4/1 shares, a capital gain of $120 on the 4/2 shares, and a capital gain of $1440 on the 4/3 shares, for a net capital gain of $1260.

As the brokerage views this, you actually did:

4/1/2021 - Buy 100 shares at $40
4/2/2021 - Buy 60 shares at $35
4/3/2021 - Buy 120 shares at $25
4/29/2021 - Sell 100 shares bought 4/1 at $37
4/29/2021 - Sell 60 shares bought 4/2 at $37
4/29/2021 - Sell 120 shares bought 4/3 at $37

So the first sale meets all the conditions for a wash sale: you sold for a loss, and you bought replacement shares within 30 days before the sale. Thus the $3 per share loss is added to the basis of the replacement shares: 60 shares from 4/2 and 40 of the 120 shares from 4/3. You now have:

4/2: hold 60 shares with basis $38
4/3: hold 40 shares with basis $28
4/3: hold 80 shares with basis $25

Now, you sell the 60 shares bought on 4/2. This has become a wash sale, because you now have a capital loss of $1 on these shares, and you bought 60 shares on 4/3 which are not already replacement shares. So you now have

4/3: hold 40 shares with basis $28
4/3: hold 60 shares with basis $26
4/3: hold 20 shares with basis $25

Now, you sell these three lots, and in this example, they all have capital gains, of $9*40=360, $11*60=660, $12*20=240, a total capital gain of $1260. This is the same as without the wash sale rule. (But even if these shares had a capital loss, you would not have a wash sale on the last lot because there were no replacement shares.)
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Re: Selling All Lots of Individual Stock In One Go - Tax?

Post by Tubes »

Thanks grabiner! Selling them all heals the wound.

Will this complicate OP's 1099-B reporting, even if the end result is the same?
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Re: Selling All Lots of Individual Stock In One Go - Tax?

Post by grabiner »

Tubes wrote: Sat May 08, 2021 8:54 am Thanks grabiner! Selling them all heals the wound.

Will this complicate OP's 1099-B reporting, even if the end result is the same?
The individual sales might be reported on a 1099-B, but as long as all the shares are covered and the total is correct, the overall totals can just be copied to Schedule D. If a Form 8949 needs to be filed, there would just be one entry with "Various" for the purchase dates to cover multiple short-term sales; again, the total is what matters.

Tax filing gets more complicated if there is an issue the brokerage doesn't report, such as a wash sale which was not automatically handled. (Brokerages report wash sales only for identical securities in the same account, while you have a wash sale if you buy substantially identical securities even in a different account.) You then have to report the corrections on your Form 8949.
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keyfort
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Re: Selling All Lots of Individual Stock In One Go - Tax?

Post by keyfort »

grabiner wrote: Sat May 08, 2021 8:40 am
Tubes wrote: Sat May 08, 2021 8:25 am OK, let's say you sold them on 04/29/21 for $37. Since you bought identical shares within the previous thirty days (4/2 an 4/3), your sale of the 4/1 lot was at a $3 per share loss, and is a wash sale.

Here's where I throw up my hands and hope someone else can answer. Since you sold it all and don't have any more holdings in this tax year, I'm not sure what other rules apply here which *may* make the wash a non-event. I don't know. I avoid wash sales like the plague because they complicate life in ways I don't need in retirement. :happy
If you sell all shares bought in the last 30 days, you may have a wash sale, but it won't affect your capital loss because you sold the replacement shares.

This is what I call an irrelevant wash sale. In the example above:

4/1/2021 - Buy 100 shares at $40
4/2/2021 - Buy 60 shares at $35
4/3/2021 - Buy 120 shares at $25
4/29/2021 - Sell 280 shares at $37

Ignoring the wash sale rule, you would have a capital loss of $300 on the 4/1 shares, a capital gain of $120 on the 4/2 shares, and a capital gain of $1440 on the 4/3 shares, for a net capital gain of $1260.

As the brokerage views this, you actually did:

4/1/2021 - Buy 100 shares at $40
4/2/2021 - Buy 60 shares at $35
4/3/2021 - Buy 120 shares at $25
4/29/2021 - Sell 100 shares bought 4/1 at $37
4/29/2021 - Sell 60 shares bought 4/2 at $37
4/29/2021 - Sell 120 shares bought 4/3 at $37

So the first sale meets all the conditions for a wash sale: you sold for a loss, and you bought replacement shares within 30 days before the sale. Thus the $3 per share loss is added to the basis of the replacement shares: 60 shares from 4/2 and 40 of the 120 shares from 4/3. You now have:

4/2: hold 60 shares with basis $38
4/3: hold 40 shares with basis $28
4/3: hold 80 shares with basis $25

Now, you sell the 60 shares bought on 4/2. This has become a wash sale, because you now have a capital loss of $1 on these shares, and you bought 60 shares on 4/3 which are not already replacement shares. So you now have

4/3: hold 40 shares with basis $28
4/3: hold 60 shares with basis $26
4/3: hold 20 shares with basis $25

Now, you sell these three lots, and in this example, they all have capital gains, of $9*40=360, $11*60=660, $12*20=240, a total capital gain of $1260. This is the same as without the wash sale rule. (But even if these shares had a capital loss, you would not have a wash sale on the last lot because there were no replacement shares.)
Amazing. I was able to follow this, and so I think I see how it all works out. In the case of selling all the shares, the end result is the same whether wash sale or not.

Of course, I just checked my log and some of the shares were bought more than 30 days before I ended up selling everything. At each step I find myself still wondering. Another reason I probably shouldn't have tried individual stocks. It'll cost more to do the tax forms for this than the net gain :?
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