Brokerage cost basis issue

[investor231i]

Hello fellow bogleheads,

I made two sell trades at Schwab. After the first trade executed (not settled), I made the second trade; and Schwab allowed me to choose the same lot which I used for the first trade. I did that; and the trade was executed . In the first/second trade, these were long term securities as the same lots were chosen.

I also have additional short term lots of the same security in my brokerage account. So, in the second trade which I was placing the Schwab system, Schwab should have showed that the long term securities are not there; and only short term are available. I would not have put the order then. But now that has happened. I talked to Schwab (multiple reps.). No one seems to have a clue of how to fix this.

Could the experts on the forum please let me know of their advice on this: if this has happened to someone at Schwab or any other brokerage firm.

[nalor511]

Schwab shouldn't have shown you the lot twice, but you also should have done the math and not sold the same lot twice. You're stuck, you owe the taxes. The best you could hope for would be for them to unwind the second sale, but it's going to be a huge hassle, and unless you have screenshots proving your case, they may not do it. How much are the taxes? Might not be worth the hassle

[erp]

If you double-sell a lot, then they go by FIFO on the second sale. Is that what you mean by "cost basis issue"?

If you didn't want to sell the 2nd lot, then you can buy it back right now.

If you are upset that you have a realized gain on the 2nd lot, then perhaps you have other more recent lots that you can switch to and try to minimize any gains - you have until settlement date to do this.

If you sold both lots at losses, then you could buy both lots back - this would trigger wash sales and the original purchase dates would be preserved. And then sell only the LT lot again.

[investor231i]

>>>>If you are upset that you have a realized gain on the 2nd lot, then perhaps you have other more recent lots that you can switch to and try to minimize any gains - you have until settlement date to do this.

Yes, this is exactly what has happened. For simplicity, both trades will have gains (no losses). The first trade, for example, was for 20 dollars; and the second is 25 dollars. So, more gain in second which I would definitely not want to be short term.

Total tax hit would be around 5-7k, so need to get this resolved (as one other expert mentioned, if it would have been small, I would have ignored it).

[erp]

If the 2nd sale has not settled yet and you have other lots that you could sell instead for far less gain, then call them immediately and tell them you want to reselect the lots that were sold on the 2nd sale.

[investor231i]

I spoke with Schwab. The rep is giving me an excuse that the settlement will happen tomorrow. So, we can fix this tomorrow. I doubt him, though. What is generally the way to escalate the issue with higher-ups in a brokerage. It is a pity that I spend 1.5 hours on the phone; and talked with 4 reps; and they could not fix this.

[Wiggums]

I spoke with Schwab. The rep is giving me an excuse that the settlement will happen tomorrow. So, we can fix this tomorrow. I doubt him, though. What is generally the way to escalate the issue with higher-ups in a brokerage. It is a pity that I spend 1.5 hours on the phone; and talked with 4 reps; and they could not fix this.

Customer service cannot fix this type of issue. Even if you are on a recorded line, speaking with their trading desk, they can’t modify a transaction once it has executed. Many times they can’t even cancel the transaction once it leaves their platform.