Wash Sales

[Christian]

A client who trades stocks is doing handstands over the new reporting requirements. His repeated wash sales have eliminated his trading losses for the year according to his broker's annual 1099-B form which is ,of course, reported to the IRS. He wants me to enter the individual trades reported on his individual trade forms furnished to him with each trade which do not indicate a given trade is a wash sale. I have advised him to send only information on Form 8949 and Schedule D which comports with the annual Form 1099-B

provided by his broker thus matching the broker's and the IRS figures. Is this not correct ?

All his transactions are reported in box A of Form 8949.

[Guest Taxed]

Watch out this guy is dangerous! Give him a copy of the wash sale rules. I am sure you can get from his broker the wash sale doc that every brokerage house has.

[TaxMan60601]

That's correct. Also every brokerage house issue annual 1099 consolidated report/forms which includes wash sales activities with the relevant code so if you just enter the full and correct info in the ATX you will get the correct return, as per the new reporting requirements.

[MsTabbyKats]

If they are Box A...the IRS gets all the information. Gone are the days where he could get away with not reporting the wash. You have to do it the correct way....and have the brokers statement match what you send it. Otherwise...the nasty letter will be in the mail.

[joelgilb]

Well, maybe the new reporting rules will protect the preparers from clients like this one that want to avoid the law.

[MsTabbyKats]

Well, maybe the new reporting rules will protect the preparers from clients like this one that want to avoid the law.

But Joel, as the preparer you always have the option to not do the return.

Personally, I like the new reporting rules...everything is spelled out for us.

I especially like it with the wash sales included....because it wasn't fun when someone bought/sold/bought/sold/bought all within a few months...and if you did it correctly you wasted a lot of time "counting days"....and the explaining "wash sales".

No one wants to hear that what they thought was their "great investing strategy" wasn't.

At least when it's written out in black and white the client cannot argue.

[Christian]

I did as TaxMan 60601 indicated. The figures matched almost to the dollar. He will simply have to adjust to the new reality or get another practitioner.