Wash sale with days added to holding period?

[Margaret CPA in OH]

1099B shows several sales including 3 "Wash sale: 354 days added to holding period FIRST IN FIRST OUT" and 323 days and 295 days. I've not seen this before. Correct way to handle? What does it mean to add days to holding period?

[jklcpa]

The days are added so that the holding period for the replacement stock includes the period you held the stock you sold. It sounds like those days noted are a memo item alerting the investor that the holding period will not start with when he or she actually purchased the shares that are causing the wash.

[Margaret CPA in OH]

I'm not clear on how to enter it, then. They have completely liquidated the account do perhaps that is why those are listed under short term. I am not listing these as separate transactions, right? It seems the additional days for holding have been taken into account when the sales were reported.

There are also a couple listed on the long term list with basis reported. They show 600+ days added with purchase dates within a month of sale but in the long term listing. Should the entry be something different? Do I need to isolate these and indicate wash sale?

[jklcpa]

I would enter what the 1099B shows. Any part of a loss that is disallowed should have a code W and an amount. The added days are for the securities that caused the wash sale loss to be disallowed, and the holding period of those that were purchased are adjusted to reflect the additional days as if they were purchased when the original security being sold was purchased. They could be either short- or long-term, depending on how long the original security was held. Was the wash in the prior year, and now you are seeing only the sale of the remaining securities that were affected by this in the prior year?

[Margaret CPA in OH]

If I enter what the 1099 shows, I can just enter the bottom line total with the appropriate box they list on top. Each has the corresponding box with basis shown, A or D. Nowhere is there a code W, just the verbiage I mentioned. There were no prior year sales or, so far as I can tell, any other sales until these holdings were liquidated in 2013. The client has provided a spreadsheet showing original purchases and all reinvestments taken from statements.

I think I will just list as the statement shows with the code the statement says to use. Just seems weird to have the listing this way.

Thanks for the help!

[joanmcq]

I think they were wash sales in the past, and that's what the notes mean, if the detail of the sale transactions doesn't show a disallowed loss.

[Margaret CPA in OH]

The total of the g/l of all of them is about $1. If, for some reason, a notice arrives, I will deal with it then. They have completely disposed of the holdings so don't think there will be bad vibes in the future.

Thanks for replies!

[Kea]

One I did yesterday was all covered, code A. But there was one transaction with a 37¢ wash sale! Since it rounds to $0, do I really have to break it out?

I'm tempted to follow Margaret's lead & just deal with the notice IF it arrives.