A Wash Sale is trading activity in which shares of a security are sold at a loss and a substantially identical security is purchased within a 61 day window that extends from 30 days before the date of the sale to 30 days after the date of the sale. The portion of the loss associated with the wash sale is then deferred and cannot be immediately recognized.
TaxACT has partnered with GainsKeeper to offer its customers a solution for calculating capital gains for the Schedule D. GainsKeeper is a tax planning tool that helps investors with complicated capital gains calculations and tax implications. GainsKeeper calculates capital gains by tracking investments and adjusting portfolios for wash sales and corporate actions. Investors can then generate a Schedule D making tax preparation and filing easier. The list of transactions reportable on the Schedule D can be imported into TaxACT from GainsKeeper for electronic tax filing purposes.
TaxACT has also partnered with TradeLog to offer its customers a solution for calculating capital gains on Schedule D. TradeLog is the premier Schedule D / Wash Sale Generator software program for active traders and investors. TradeLog allows you to easily import the trade history from over 30 online brokers. The software then accurately matches your trades based on IRS rules and generates the reporting you need for Schedule D. The list of transactions reportable on the Form 8949 and Schedule D can be imported into TaxACT from TradeLog through a CSV file for electronic tax filing purposes.
A definition of Wash Sales and some examples are available in IRS Publication 550 Investment Income and Expenses (Including Capital Gains and Losses).
Page 75 (Glossary): Wash sale - A sale of stock or securities at a loss within 30 days before or after you buy or acquire in a fully taxable trade, or acquire a contract or option to buy substantially identical stock or securities.
Page 59: You cannot deduct losses from sales or trades of stock or securities in a wash sale unless the loss was incurred in the ordinary course of your business as a dealer in stock or securities.
A wash sale occurs when you sell or trade stock or securities at a loss and within 30 days before or after the sale you:
- Buy substantially identical stock or securities,
- Acquire substantially identical stock or securities in a fully taxable trade,
- Acquire a contract or option to buy substantially identical stock or securities, or
- Acquire substantially identical stock for your individual retirement account (IRA) or Roth IRA.
If you sell stock and your spouse or a corporation you control buys substantially identical stock, you also have a wash sale.
If your loss was disallowed because of the wash sale rules, add the disallowed loss to the cost of the new stock or securities (except in (4) above). The result is your basis in the new stock or securities. This adjustment postpones the loss deduction until the disposition of the new stock or securities. Your holding period for the new stock or securities begins on the same day as the holding period of the stock or securities sold.
Additional information and examples are available on pages 59 and 60 of this publication.
To enter a wash sale in the TaxACT program:
- From within your TaxACT return (Online or Desktop), click on the Federal Q&A tab
- Click Investment Income to expand the category and then click Gain or loss on sale of investments
- Click Capital gain or loss (Form 1099-B)
- Click Add to create a new copy of the form or Click Review to review a form already created
- After entering the investment property details, continue to the screen titled Investment Sales - Adjustment Codes
- Select W-Wash Sale from the drop-down list and click Continue
- On the next screen titled Investment Sales - Adjustments, enter the amount of wash sale loss disallowed. For partial wash sale transactions, only enter the portion of the loss that is disallowed in the Adjustment Amount field.