Yet another wash sale question.

[IslesDynasty]

I know there have been several and several and several questions on wash sales in this forum and I have searched them all but can’t find an answer in my particular scenario.

I have had a “play” account for several years that I have decided to sell all securities and close. I am wondering if it will be a FOREVER wash sale if I sell all my shares in a losing security that I have bought within the last 30 days and never to trade in that account again.

Example:

Had 500 shares of ABC
Bought 300 shares of ABC on March 3.

Decided to sell ALL 800 shares of ABC at a loss today and never to trade it again and/or just close the account.

Will I have a forever wash sale on the 300 shares that I bought 14 days ago or will that clear after 61 days from now?

The don’t trade after wash sale thing is easy but the 30 days before is seldom talked about and trips me up.

[livesoft]

Not a wash sale at all. See this thread: viewtopic.php?t=382902

You can still trade in the security after 30 days (i.e. on the 31st day after selling), so your thought of never in that account doesn't matter. Or you could create a wash sale by buying the same security in a different account of years in 5 days after selling at a loss and that would create wash sale.

[cchrissyy]

if you sell the shares that could have caused a wash, then there is no wash sale. you'll be claiming the whole loss.

[IslesDynasty]

Ok. My head is spinning. Haha. Just for simplistic purposes of this discussion, let’s say I don’t have any other accounts.

Also, let’s take away the fact that I’m closing the account.

Selling all 800 shares of ABC and not buying them or anything “similar” for 31 days will NOT be a wash sale even though I bought 300 of those 800 shares 14 days ago? I have a pretty good understanding of things but when it comes to the “can’t buy 30 days before the sale” thing just trips me up.

[cchrissyy]

right you can buy something today and sell it for a loss tomorrow, and that's fully deductible with absolutely nothing to do with the wash sale rule unless in the +- 30 days you bought other shares of the same thing.

[Duckie]

Selling all 800 shares of ABC and not buying them or anything “similar” for 31 days will NOT be a wash sale even though I bought 300 of those 800 shares 14 days ago? I have a pretty good understanding of things but when it comes to the “can’t buy 30 days before the sale” thing just trips me up.

In your example you do have a wash sale of 300 shares, but since you have sold all your shares including the replacement shares it is an "irrelevant" wash sale. Your 1099-B may show in box 1g an amount that is disallowed. But if that happens you will still get the entire loss as long as you fill out Form 8949 correctly to report the adjustment (boxes f and g). You will have to attach an explanatory statement. See the instructions for Form 8949 page 9 under code "W":

• "If you received a Form 1099-B (or substitute statement) and the amount of nondeductible wash sale loss shown in box 1g is incorrect, enter the correct amount of the nondeductible loss as a positive number in column (g). If the amount of the nondeductible loss is less than the amount shown on Form 1099-B (or substitute statement), attach a statement explaining the difference. If no part of the loss is a nondeductible loss from a wash sale transaction, enter -0- in column (g)."

Since no part of the loss would be a nondeductible loss you would enter W in box f and -0- in box g and add the statement.

[IslesDynasty]

Thank you! I knew there was more to it. Head isn’t spinning anymore. I never saw this explanation before.

[rkhusky]

If you sell the 300 shares first, then no wash sale.

If you sell the 500 shares first, then you have a wash sale. You recoup the disallowed loss when you sell the 300 shares.

If you sell all 800 shares with one transaction, then it will depend on the brokerage.