Exempt Trade from Triggering a Wash Sale (Adjustment Code X)

Assigning adjustment code X to an open leg of a trade will exempt that trade from wash sale calculations. The trade will not be considered a "replacement" position and therefore will not trigger a wash sale.

Take Note: if the shares/contracts opened are subsequently closed at a loss, that loss may be deferred to a future date if another substantially identical position is opened. In other words: code X does not prevent a loss from becoming a wash sale.

How and when might this code be used? If substantially identical shares/contracts are acquired in an event that not "fully taxable" according to IRS rules, then those shares/contracts opened should not trigger a wash sale if there were losses within +/- 30 days. Examples may be: shares that were inherited, or shares received as part of a spin-off or stock split. Please consult with a tax advisor regarding your specific situation and whether shares/contracts received should be exempt from wash sale rules.

Instructions:

1. Select the Open leg of a trade(s) to be exempted. (You may select multiple trades, only select the open leg indicated with an "O" in the O/C column.)
   
   
2. From the Adjustments menu, select the Adj Code function, as shown below
   
   Alternatively, you can right-click on the trade record and select Tax Adjustment Code from the shortcut menu.
   
   
3. Click the check box next to the option (X) Do not include this trade in wash sale calculations, as shown below.
   
   
   
4. Click on the Apply button to save your changes.
   
   
5. An "X" will be entered in the Adj Code column (if visible), for the trade(s) you exempted. You will be asked to save records.