Once you acquire new shares, then the wash sale amount gets added to the
cost basis of the replacement shares. The Wash account should balance to
zero in that situation, because the disallowed loss amount is consumed by
the new shares' cost basis. There is no separate wash sale amount you
report on your taxes: on Form 8949 you report that a loss was disallowed
because of a wash sale. The disallowed loss gets applied to a future tax
lot's cost basis, and that is only reported when you ultimately sell those
shares with the adjusted cost basis.
I would rewrite the last two transactions of your example differently:
2022-06-16 * "FXAIX" "Wash sale disallowed loss from 2022-07-01"
; New back-dated transaction to disallow the loss, since the PnL cannot
be captured for tax purposes
Income:US:Fidelity:PnL -141.90 USD
Income:US:Fidelity:PnL:Wash 141.90 USD
2022-07-01 * "FXAIX" "Wash sale cost basis adjustment"
Assets:Investments:Taxable:IndexFunds:FXAIX -4.812 FXAIX {162.23 USD}
Assets:Investments:Taxable:IndexFunds:FXAIX 4.812 FXAIX {191.719 USD}
Income:US:Fidelity:PnL:Wash -141.90 USD
2022-11-15 * "FXAIX" "Sell"
Assets:Investments:Taxable:IndexFunds:FXAIX -4.812 FXAIX {191.719 USD} @
138.72 USD
Assets:US:Fidelity:IndexFunds:Cash 667.52 USD
Income:US:Fidelity:PnL 255.03 USD
You are right that the date needs to be propagated, but if you make the
adjustment on the same day as the acquisition of the replacement shares,
then the implicit date works fine. However, you technically need to adjust
the cost basis date as well, to reflect the holding period adjustment that
also happens during a wash sale.
- Robert
On Saturday, November 26, 2022 at 2:35:35 AM UTC-5 [email protected]
wrote:
> I think I’m missing something fundamental — a slightly simplified example
> of what I’m doing is provided below.
>
> I can get the final transaction to balance but at that point
> Income:US:Fidelity:PnL:Wash is back to zero. I know my brokerage is still
> tracking the wash sale though and wouldn’t I want to be tracking a non-zero
> value for taxes?
>
> Colton
>
> 2021-09-07 * "FXAIX Purchase"
> Assets:Investments:Taxable:IndexFunds:FXAIX 31.803 FXAIX {157.22 USD}
> Assets:Investments:Cash
>
> 2021-12-10 * "FXAIX dividend reinvestment"
> Assets:Investments:Taxable:IndexFunds:FXAIX 4.065 FXAIX {163.33 USD}
> Assets:Investments:Cash
>
> 2022-04-08 * "FXAIX dividend reinvestment"
> Assets:Investments:Taxable:IndexFunds:FXAIX 3.388 FXAIX {155.83 USD}
> Assets:Investments:Cash
>
> 2022-06-16 * "FXAIX Sell"
> Assets:Investments:Taxable:IndexFunds:FXAIX -31.803 FXAIX {157.22 USD} @
> 127.73 USD
> Assets:Investments:Taxable:IndexFunds:FXAIX -4.065 FXAIX {163.33 USD}
> Assets:Investments:Taxable:IndexFunds:FXAIX -3.388 FXAIX {155.83 USD}
> Assets:US:Fidelity:IndexFunds:Cash 5,014.17 USD
> Income:US:Fidelity:PnL 1177.79 USD ; because of the next transaction this
> should be reduced by 141.90
>
> 2022-07-01 * "FXAIX dividend reinvestment" ; this caused the wash sale
> Assets:Investments:Taxable:IndexFunds:FXAIX 4.812 FXAIX {162.23 USD}
> Assets:Investments:Cash
>
> 2022-07-01 * "Re-adjust cost basis due to Wash Sale"
> Assets:Investments:Taxable:IndexFunds:FXAIX -4.812 FXAIX {162.23 USD}
> Assets:Investments:Taxable:IndexFunds:FXAIX 4.812 FXAIX {191.719 USD} ;
> also suppose to propagate the date?
> Income:US:Fidelity:PnL:Wash -141.90 USD ; accounting for wash sale
>
> 2022-11-15 * "FXAIX Sell"
> Assets:Investments:Taxable:IndexFunds:FXAIX -4.812 FXAIX {191.719 USD} @
> 138.72 USD
> Assets:US:Fidelity:IndexFunds:Cash 667.52 USD ; should match cash
> deposited from transaction
> Income:US:Fidelity:PnL 113.13 USD ; loss from the transaction
> Income:US:Fidelity:PnL:Wash 141.90 USD ; required to balance but results
> in zero'ing out PnL:Wash
>
> On Nov 24, 2022, at 7:43 PM, Robert Sesek <[email protected]> wrote:
>
> I book wash sales similar to that example. Though I do adjust the
> disallowed loss into a Wash account, rather than directly into PnL.
>
> What cost basis lot are you using to reduce the inventory when you sell
> the shares? You need to use the adjusted cost basis for those shares. Here
> is a hypothetical sale based on the example in
> irs-simple-example-1.beancount:
>
> 2014-01-01 * "Sell adjusted lots"
> Assets:Investments:STOCK -100 STOCK {10.5 USD} @ 11.00 USD ;
> Adjusted cost basis shares
> Assets:Investments:Cash 1,100.00 USD
> Income:Investments:PnL -50.00 USD ; PnL from the adjusted cost
> basis
>
> Conceptually, the transactions are:
> - Buy stock
> - Sell stock at a loss
> - Dividend reinvestment
> - Cost basis adjustment of the reinvested dividend shares by the loss
> amount
> - Sell reinvested shares, reducing the position by the lot with adjusted
> cost basis
>
> If you are still having trouble, it would be helpful for you to post the
> transactions you are having an issue with.
>
> - Robert
>
> On Thursday, November 24, 2022 at 4:55:46 PM UTC-5 [email protected]
> wrote:
>
>> I've been struggling with the *right way* to account for wash sales. I've
>> been reading these:
>> - https://github.com/beancount/beanlabs/tree/master/beanlabs/washsales
>> -
>> https://beancount.github.io/docs/how_inventories_work.html#augmentations-vs-reductions
>>
>> My situation is pretty simple:
>> - bought some stock
>> - a bit later sold some lots at a loss
>> - automatic dividend reinvestment got me (oops) and this is what
>> triggered the wash sale
>> - few months later I sell the lot that triggered the wash sales
>>
>> I can adjust the cost basis of the lot that triggered the wash sale but
>> the problem is that the new cost basis throws off my later transaction when
>> I sell the wash sale lots.
>>
>> My case is exactly like this one:
>>
>> https://github.com/beancount/beanlabs/blob/master/beanlabs/washsales/irs-simple-example-1.beancount
>>
>> Except that after the last transaction there is one more transaction
>> where I sold the lot with the adjusted cost basis and I can't get this to
>> balance (even if I use an account like "Income:Investments:PnL:Wash"
>>
>> Any tips appreciated!
>>
>> Colton
>>
>
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