Good explanation. No one really explains that you don't loose the loss forever due to wash sale, it just gets calculated in your cost basis. So finally when you sell, your loss/profit is accumulated. The Key here is, if you want to realize the accumulated loss on taxes then get out of the total position before end of year and don't buy for another 30 days.
Possibly true but if you accumulated wash sales over the year, remember to sell before the end of the year and don't buy back for more than 30+ days, so it can be realized as a loss and balance it out with any other gains you had for the year.
Can the 3k be used to reduce the wash sale loss disallowed? I know its use to tackle the capitals and gains and cancel each other... You know by any chance?
I have a substantial wash sales loss disallowed. What happens if I no longer own the stock. How can they add the loss to the stock if I no longer own it? Is the money lost for good if I don’t buy the stock back again and add on the increased cost basis. Thank You
It’s added to the cost basis, so my cost basis became 45 instead of 40. Now if I sell at 50, IRS wants to tax me on $10 profit and not $5 of actual profit. That’s what my accountant/CPA is telling me. My question is, why do they want to tax me on $5 that I lost??? If they don’t want to give me benefit of loss that’s fine but why add my loss as gain and tax me? I don’t understand this math by IRS. Or my CPA doesn’t know?
Do brokerage companies like Fidelity automatically add back the basis when they give you the 1099-B, or does the taxpayer have to do this calculation themselves?
I did a wash sales on a cash grab stock happening during May called FFIE heard it was going up and will make you a few bucks I threw in 20 then lost -5 left me with 15 so I sold then heard rumors it was going to go back up next week so hop on the train and bought it when it was just a Dollar no more cents and then I saw a few bucks going up then sold right away when I saw it drop very fast , Then I started to do it a lot with other stock like rivian stock and so on but cheap one and only added a few bucks now learning about wash sales now I’m worried I will need to pay around 1-2 k of losses maybe I didn’t math super wrong
Can you sell a stock for a loss and then sell CSP on that same stock within the 30 of the sell of the stock? If you don’t get assigned are you still incurring a wash sale?
@@JenMarco So if you sell 100 shares for a $100 loss, then buy 200 shares of the same stock a week later for $50, what would be your cost basis for an individual share in the new position?
@Ikaika Arnado buying 200 shares for $50 = 100 of the new shares cost you $25 , the other 100 will now be adjusted to $125. Your average cost is gonna be 0.75 per share (0.25 before adjustment). If one day you sell all 200 together and get $155, only $5 are gonna be taxed as capital gains.
Thanks for explaining this the way you did. If the stock you have a 'wash sale' on goes up dramatically and you eventually sell and make a large profit on the sale years later it seems your at least 'essentially' getting back the 'tax benefit' but in such a way as to show 'less' in taxable gain. Correct?
So glad I watched this video! I was going to sell losing stocks to take the loss and buy them right back. I guess the government is ahead of that trick. I should have known.
What I don't understand is the "within 30 days before or after" section. So if I buy more MSFT the week before I sell, I can't claim the loss because it wasn't 30 days?
Selling the stock for a loss first and buying back the stock and… buying the stock first and then selling the stock for a loss are both basically the same because you still end up long the stock at the end of the day. So to answer your question, yes
@@dustindodge5974 that's not a wash sale either, because you have $10 + $10, then -$20. Wash would be if your minus came before your plus. e.g., Wash = $10 - 10 + 10. Your brokerage might let you know. I did a wash sale on a position, and there's a blue W by my holding (in Fidelity).
@@dougb8207 yes I understand the buy then sell then buy = wash sale part. I'm trying to figure out how I accidentally did a WS last year (small amount luckily) even though I never bought after selling. Only thing I can think of is that I bought 10 additional shares the week before I sold 100 for a loss, but I didn't sell those 10 new shares. Thanks
@@dustindodge5974 can you call your broker and ask? Mine has been very responsive, pick up quickly and are happy to answer questions. Just a thought; sounds like you have a reasonable question to me.
I have bought QQQ at different times last year, Mar, Apr May, Aug. And sold them all yesterday (04/18/23) at a lost. Today it showed that I have wash sale on the one I bought on Mar 3rd 2022. I noticed I have also sold one that was bought on Mar 7th 2022. Yes these 2 different purchases were within 30 days, but I also sold 2 that were purchased in Apr 2022 and within 30 days from each other, why didn't I get wash sale on Apr one? I sold all these QQQ yesterday, holding period is much longer that 30 days? Can someone tell me why do I get wash sale on the March 2022 one? I always thought the wash sale rule count the 30 days before sale date and 30 days after? Why do I get wash sale after holding for more than a year?
I don't believe different brokerages would know or report the wash sale, but they report to the IRS who would see it. So yeah, in this case you'd probably have to adjust manually or potentially face the wraith of the IRS.
So, if I sell *Stock A* at a loss (completely exit the position at a loss), can I use the proceeds to buy *Stock B* within the same hour? Assume Stock A and Stock B are in the same sector. Are there any repercussions to this sort of trade if not done often? Thanks
So this is about taxes, not actual amounts earned or lost on the sale. You're not losing $, you're just not getting to claim the loss on your taxes if you buy the stock back at a reduced price within 30 days (which might cost $ tax wise).
I bought nvidia and sold at a lost. Then bought it back 1 week later where they added my lost to my cost basis and then sold again about a week after. I am now waiting 30 days. After those 30 days passed, if i buy nvidia again will they still add the lost to my cost basis or bot anymore?
good question. I don't wash sale rule applies to ROTH because you are not trying to deduct a loss against a gain.... everything is tax exempt. I wonder if then you had to take an early withdrawal and would wash sale matter. I don't know.
Good explanation. No one really explains that you don't loose the loss forever due to wash sale, it just gets calculated in your cost basis. So finally when you sell, your loss/profit is accumulated. The Key here is, if you want to realize the accumulated loss on taxes then get out of the total position before end of year and don't buy for another 30 days.
So glad Fin Tips are back, keep up the good work Dustin!
Ha! I love this conversation because I see it on Facebook pages bantered about all the time. People think they lose that loss forever!
Thanks for the info
Possibly true but if you accumulated wash sales over the year, remember to sell before the end of the year and don't buy back for more than 30+ days, so it can be realized as a loss and balance it out with any other gains you had for the year.
Can the 3k be used to reduce the wash sale loss disallowed?
I know its use to tackle the capitals and gains and cancel each other...
You know by any chance?
Thank you
I have a substantial wash sales loss disallowed. What happens if I no longer own the stock. How can they add the loss to the stock if I no longer own it? Is the money lost for good if I don’t buy the stock back again and add on the increased cost basis. Thank You
It’s added to the cost basis, so my cost basis became 45 instead of 40. Now if I sell at 50, IRS wants to tax me on $10 profit and not $5 of actual profit. That’s what my accountant/CPA is telling me. My question is, why do they want to tax me on $5 that I lost??? If they don’t want to give me benefit of loss that’s fine but why add my loss as gain and tax me? I don’t understand this math by IRS.
Or my CPA doesn’t know?
You should be tax $5 not $10 you might be a new cpa 😅
Your CPA doesn't know. Most popular trading platforms calculate your cost basis automatically so you don't worry about this.
You're adding it to your total cost basis, assuming you made net profit, it reduces your taxable gain.
@@padam231does Robbinhood do that!
Do brokerage companies like Fidelity automatically add back the basis when they give you the 1099-B, or does the taxpayer have to do this calculation themselves?
I did a wash sales on a cash grab stock happening during May called FFIE heard it was going up and will make you a few bucks I threw in 20 then lost -5 left me with 15 so I sold then heard rumors it was going to go back up next week so hop on the train and bought it when it was just a Dollar no more cents and then I saw a few bucks going up then sold right away when I saw it drop very fast , Then I started to do it a lot with other stock like rivian stock and so on but cheap one and only added a few bucks now learning about wash sales now I’m worried I will need to pay around 1-2 k of losses maybe I didn’t math super wrong
how does this affect anyone daytrading solely spy options under an llc?
Can you sell a stock for a loss and then sell CSP on that same stock within the 30 of the sell of the stock? If you don’t get assigned are you still incurring a wash sale?
Thanks Dustin great review.
Love this breakdown
Yeah, the basis just moves over, but realistically how many people understand how cost basis works?
I guess everyone who watched the video now knows
@@JenMarco So if you sell 100 shares for a $100 loss, then buy 200 shares of the same stock a week later for $50, what would be your cost basis for an individual share in the new position?
@Ikaika Arnado buying 200 shares for $50 = 100 of the new shares cost you $25 , the other 100 will now be adjusted to $125. Your average cost is gonna be 0.75 per share (0.25 before adjustment). If one day you sell all 200 together and get $155, only $5 are gonna be taxed as capital gains.
Thanks for explaining this the way you did. If the stock you have a 'wash sale' on goes up dramatically and you eventually sell and make a large profit on the sale years later it seems your at least 'essentially' getting back the 'tax benefit' but in such a way as to show 'less' in taxable gain. Correct?
did you a confirmation on this? I think you're right but not certain.
Yes, that's correct.
Thanks@@williamc4221
It’s just a loss added to the wash sale total or the total value of the asset in the trade?
So glad I watched this video! I was going to sell losing stocks to take the loss and buy them right back. I guess the government is ahead of that trick. I should have known.
What I don't understand is the "within 30 days before or after" section. So if I buy more MSFT the week before I sell, I can't claim the loss because it wasn't 30 days?
Selling the stock for a loss first and buying back the stock and… buying the stock first and then selling the stock for a loss are both basically the same because you still end up long the stock at the end of the day. So to answer your question, yes
@@marvin4454 what if I bought 10 shares last week, 10 shares this week, then sell all 20 next week? I'm not long but I also haven't held for 30 days?
@@dustindodge5974 that's not a wash sale either, because you have $10 + $10, then -$20. Wash would be if your minus came before your plus. e.g., Wash = $10 - 10 + 10.
Your brokerage might let you know. I did a wash sale on a position, and there's a blue W by my holding (in Fidelity).
@@dougb8207 yes I understand the buy then sell then buy = wash sale part. I'm trying to figure out how I accidentally did a WS last year (small amount luckily) even though I never bought after selling. Only thing I can think of is that I bought 10 additional shares the week before I sold 100 for a loss, but I didn't sell those 10 new shares.
Thanks
@@dustindodge5974 can you call your broker and ask? Mine has been very responsive, pick up quickly and are happy to answer questions. Just a thought; sounds like you have a reasonable question to me.
I have bought QQQ at different times last year, Mar, Apr May, Aug. And sold them all yesterday (04/18/23) at a lost. Today it showed that I have wash sale on the one I bought on Mar 3rd 2022. I noticed I have also sold one that was bought on Mar 7th 2022. Yes these 2 different purchases were within 30 days, but I also sold 2 that were purchased in Apr 2022 and within 30 days from each other, why didn't I get wash sale on Apr one? I sold all these QQQ yesterday, holding period is much longer that 30 days? Can someone tell me why do I get wash sale on the March 2022 one? I always thought the wash sale rule count the 30 days before sale date and 30 days after? Why do I get wash sale after holding for more than a year?
What if you sell for a loss, transfer the money to a different brokerage and buy it back. How would they know its a wash at that point?
I don't believe different brokerages would know or report the wash sale, but they report to the IRS who would see it. So yeah, in this case you'd probably have to adjust manually or potentially face the wraith of the IRS.
You are responsible to report that. If you don't they wouldn't know until you are audited (what happens after that I don't know)
So, if I sell *Stock A* at a loss (completely exit the position at a loss), can I use the proceeds to buy *Stock B* within the same hour? Assume Stock A and Stock B are in the same sector. Are there any repercussions to this sort of trade if not done often? Thanks
Thank you
So this is about taxes, not actual amounts earned or lost on the sale. You're not losing $, you're just not getting to claim the loss on your taxes if you buy the stock back at a reduced price within 30 days (which might cost $ tax wise).
yeah but taxes are so high it really matters a lot tho when u go to finally sell the stock and use the money from it.
can wash sale loss against any Capital Gain realized in that year.
How about the 'holding period' ?
Think it is thirty days.
I bought nvidia and sold at a lost. Then bought it back 1 week later where they added my lost to my cost basis and then sold again about a week after. I am now waiting 30 days. After those 30 days passed, if i buy nvidia again will they still add the lost to my cost basis or bot anymore?
No they won't after 30 days
what happens when you do wash sales in a roth ira??
good question. I don't wash sale rule applies to ROTH because you are not trying to deduct a loss against a gain.... everything is tax exempt.
I wonder if then you had to take an early withdrawal and would wash sale matter. I don't know.
@@123pathTube i guess i will find out when i retire lol. i haven’t gotten a answer to it. i tried calling fidelity but they are always busy.
New to investing. Does the wash sale adjustment affect the actual cash amount I paid for the newly acquired shares? Or is it ONLY a tax issue?
Sounds like it effects the share price. For instance you would be thinking you bought in at $40 but you really bought in at $45.
@@afterdark6822 is this calculated in the realized gains on whatever platform you use or on tax documents?
Slick move by the IRS to limit your ability to trade for profit. Slick.
The IRS is the slickest of them all my dude
You didn’t explain that you MuST hold it 30 days first to realize a loss
How to avoid wash sales - too bad no idiot proof instructions for avoiding them exist.
Can't avoid them
But traders who qualify and elect Section 475 (f) with the IRS do not have to adjust for Wash Sales
Mark to market.
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