How do I report a Wash Sale?

To enter your Wash Sale into the program please follow this pathway:

1. Federal 
2. Income (select my forms)
3. Investments
4. Stocks, Mutual Funds, Cryptocurrency, Collectibles, etc.

Example

Mary purchased 50 shares of Dell stock for $500 ($10 per share) on January 1, 2019. She sold the stock for $250 ($5 per share) on May 5th of the current tax year. On May 15th (within 30 days of the sale for a loss), she bought substantially identical Dell stock. The new stock cost $6 per share.  Because this purchase was within 30 days of the sale for a loss, and because the purchase was of substantially identical stock, the loss would be a Wash Sale. Add the disallowed loss for the wash sale to the cost basis of the new stock. Report this Wash Sale as follows:

Schedule D Entry:

1. Description of Property: Dell Stock
2. Date Acquired: 01/01/2019
3. Date Sold: 05/05/2023
4. Sales Price: $250
5. Cost: $500 
6. Adjustment: $250 (amount you will add to the cost basis of the new stock)
7. Check Box for: Nondeductible Loss from a Wash Sale

What if my wash sale is a loss? 

A wash sale occurs when both of these apply:

• You sell or trade stock, mutual fund shares, or bonds at a loss.
• Within 30 days before or after the sale date, you:
  • Buy substantially identical stock or shares
  • Gain substantially identical stocks or shares in a taxable trade
  • Obtain an option to buy substantially identical stock or securities
  • Get substantially identical stock for a traditional or ROTH IRA

If you have a loss from a wash sale, you cannot deduct it on your return. Additionally, a gain on a wash sale is taxable. Forms 8949 and Schedule D will be generated automatically based on the entries.

When you report the sale of the newly purchased stock, you will adjust the basis to account for the loss. Report the new basis (from example above) of $550 (50 shares X $6 per share = $300 Plus $250 wash sale loss added to basis equals cost basis of $550) as the cost.