This section lists losses that have occurred in your account(s) within the past 30 days – calculated based on your PC’s current date. These losses could potentially become wash sales if you open a new position for the same security within 30 days of the loss date. If you had a loss that is not listed in this section, then it may have already become a wash sale as a result of trades you have already made.
It's important to note that TradeLog's reporting is dependent on the data you have imported in your TradeLog file. If you have made trades since the last date imported in each account maintained in your file, then the Potential Wash Sale Report may not be accurate.
In Figure 2 you'll notice the report lists 100 shares of AAPL which were sold on 12/16/2013 and resulted in a ($2,240.00) loss.
The key date to note is when the 30-day window ends, in this example it is 1/15/2014. This means that any new position opened on AAPL through that date may trigger a wash sale and disallow this loss.
This information now allows you to make decisions about your trading. Some possible options:
If you want to avoid disallowing this loss and deferring to a future date, then not opening any positions on the same security (or contracts for that security) until the 30-day period has ended may accomplish that objective.
If you want to defer this loss to a future date, then opening another position before the 30-day period has ended may trigger that deferral.
Remember: the wash sale rule can apply across stocks and options, and long and short positions. In addition, it can apply to positions opened in other accounts, including an IRA. For a list of the types of positions that could trigger a wash sale in TradeLog, see our wash sale matrix online.
How to use this report:
Active traders will no doubt incur losses throughout the year. While you could use this report throughout the year, keep in mind that trying to avoid wash sales completely could hinder profitable trading. We recommend using this report at the end of the tax year, that is when wash sales could have a potentially negative effect. This section of the report may be helpful to use in December and January in particular.
Consider two scenarios and how this information may guide you:
Scenario 1: Let's say that you took the large loss of ($2,240.00) on AAPL on December 16, 2013, as shown in the example above. And let's say you have a net taxable gain of $60 year-to-date as of the end of that day. If you were to open a new position on AAPL prior to or on1/15/2014, that position may trigger a wash sale and disallow that ($2,240.00) loss. This means your net taxable gain would go from $60 to $2,300; and increase your tax liability accordingly! If the new position you open is not closed in the 2013 tax year, then that loss would be deferred to a future tax year when you close the position.
In a scenario like this you may choose to avoid opening any position in AAPL that could trigger a wash sale until after the 30-day window has passed.
Scenario 2: Let's say that you took the large loss of ($2,240.00) on AAPL on December 16, 2013, as shown in the example above. And let's say that you have a net taxable loss of ($5,600) year-to-date as of the end of that day. If you were to open a position on AAPL prior to or on 1/15/2014, that position may trigger a wash sale and disallow the ($2,400) loss. Which would mean your net taxable loss would now be ($3,200).
Since you are only allowed to take a maximum of $3,000 in capital losses for the tax year, you may choose to open a position in AAPL in order to defer this loss to the next tax year – and offset future gains in that year.
In all situations, keep in mind that the information presented on this report should not be construed as tax, investment, or legal advice; you are responsible for your trading decisions and any results thereof. TradeLog software is only able to report based on the information that has been imported into it. Factors such as user error or inaccurate trade information could alter the accuracy of this report.