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Desktop: Entering a Wash Sale on Form 8949

When does a Wash Sale occur? The answer is simple: it comes about when someone discards or trades their assets or securities at a loss then proceeds to do either of the following within 30 days from the time of the said trade: 


  • Purchase considerably similar assets or securities 
  • Obtain considerably similar assets or securities in an entirely taxable trade 
  • Go in for a contract or the possibility of acquiring significantly similar stock or securities 
  • Obtain considerably similar assets or securities for either or both of their IRA and Roth IRA 

Form 1099-B displays sales and purchases done with the same broker in a span of 30 days and leads to a loss. The amount is either shown on a brokerage declaration having the adjustment code “W” or in Box 1g of the Form “Wash Sale loss disallowed”. This transaction will not be added to the aggregate when Form 1099-B is aggregated in a tax return. In such a case you will have to enter the transaction separately. 

The following are other ways in which wash sales may occur: 

  • When the taxpayer trades the same assets with various brokers in the 30 day span
  • When the taxpayer’s spouse trades the same assets within the 30 days 
  • When the taxpayer’s or their spouse’s company or one in their control trades the same assets 

Despite being wash sales, the transactions above are not indicated as wash sales on Form 1099-B nor the statements of brokerage.  


A trader of assets or securities is capable of deducting losses for transactions that would have been washed sales if they had been earned in the normal course of doing business or trading. In the event that a wash sale is non deductible, the rejected loss is included in the assets purchased later.


To enter a wash sale on Form 8949 in Taxx Savage Pro: 

  • Go to the Main Menu of the Tax Return (Form 1040) 
  • Proceed to the Income Section 
  • Select Capital Gain/Loss (Sch D) 
  • Click New then enter all the information needed as shown on Form 1099-B, THEN CLICK ok 
  • In the event that the Net Gain/Loss is a nondeductible loss: 
    • Select Adjustment Code 
    • Check the W - Nondeductible Loss from a Wash Sale checkbox, the click Ok 
    • Select Adjustment to Gain/Loss then enter the amount of the loss as a positive number. 
    • Ensure that the Net Gain/Loss equals $0 

Note: This is not tax advice. It is a guide on how to enter a Wash Sale into the Tax Savage Pro Program. 

 

Additional Information:

IRS: Instructions for Schedule D, Capital Gains and Losses

IRS: Instructions for Form 8949, Sales and Other Dispositions of Capital Assets

IRS: Publication 550, Investment Income and Expenses