Wash Sales Rule _ Can you or Can you Not Identify shares?

Your Question


Wash Sales _ Multiple Firms?


I need a definitive answer, I keep getting different responses.


People say that you can/cannot identify shares to avoid the wash sale....which is it??





Scenario-


Purchase XYZ 10/1 via Firm A


Purchase XYZ 10/2 via Firm B





Sell XYZ purchased from Firm A at a loss.


Still holding shares from firm B.





I understand that if this was all done with the same brokerage it would typically be a Wash Sale because I did not Identify the shares being sold.


BUT...since this is a different brokerage, technically aren't the shares identified???





For reference read section ';4:OLD Shares'; on this page-


http://www.fairmark.com/capgain/wash/wsreplac.htmWash Sales Rule _ Can you or Can you Not Identify shares?
%26lt;%26lt;%26lt;Can you or Can you Not Identify shares?%26gt;%26gt;%26gt;





If all your shares are held in one account you can identify which shares you want to sell from that account using the procedure outlined at





http://www.fairmark.com/capgain/ident.ht鈥?/a>





The identification process is separate from the wash sale rule.





%26lt;%26lt;%26lt;People say that you can/cannot identify shares to avoid the wash sale....which is it??%26gt;%26gt;%26gt;





You can, in some circumstances, identify shares to avoid a wash sale. In the example you gave, you would not avoid a wash sale. Here is an example of how you could avoid a wash sale with all the shares in one account:





Purchase 100 shares of XYZ for $1,000 on 10/1.


Purchase 100 shares of XYZ for $800 on 10/2.





If, later in October, you sold 100 shares of XYZ for $900 you would have a wash sale if you sold the shares purchased 10/1 buy you would not have a wash sale if you sold the shares purchased 10/2. (If you sold the shares purchased 10/2 you would not have a loss so you would not have a wash sale.) If you sold the shares purchased 10/1 you would have a loss and consequently you would have a wash sale. This is true if all the shares are held at one firm or if the are split between two firms.





%26lt;%26lt;%26lt;since this is a different brokerage, technically aren't the shares identified???%26gt;%26gt;%26gt;





Common sense tells me that firm A cannot sell shares held by firm B so if you sell using firm A you would be selling shares held by firm A and not shares held by firm B, so you should not need to specify that you are selling shares held by firm A. I am fairly sure that is correct, but I am not a professional and I have never read anything written by a professional addressing that specific question.





If you want a more definitive answer I recommend you repeat the question on the Fairmark message board, where tax professionals answer questions.Wash Sales Rule _ Can you or Can you Not Identify shares?
MSC is incorrect. Wash sales are ONLY affected in the account where the original trade took place. If you have a retail account and have a wash sale, you can buy the stock immediately of you want in say an IRA account. The plating on the account MUST be different. Accounts are not ';grouped'; for wash Report Abuse

One cannot identify wash sales on stocks at multiple firms or in multiple accounts. Wash sales are ONLY calculated for in TAXABLE ACCOUNTS.


http://www.sec.gov/answers/wash.htm Report Abuse

It doesn't matter if you use one broker or two. For the purpose of determining wash sales, all of your accounts (and your spouse's accounts) should be grouped together as if they were one.





But you can identify which shares you're selling, and that might determine whether you're selling at a profit or a loss. That's why brokers only report sales to the IRS, and not purchases, because it's up to you to match up the buys and the sells.





I see your confusion about the link you posted. But again, it doesn't matter how many brokers you have. It's all about how you write your Schedule D. If you use TurboTax or Gainskeeper to handle the details, you should be able to avoid the headache, and then as long as you're not purposely trying to avoid taxes, it shouldn't be a problem.
The wash sale actually comes into effect when you purchase shares after you have previously sold them not before. You can specify exactly which shares you wished to sell even when they are held by the same broker. That comes into play possibly under several different scenarios. One would be that selling one lot would result in a loss whereas selling another lot would result in a gain. Another would be where selling one lot would result in a short term gain and selling another a long term gain.