There is more than one way to record wash sales. Assume that you own 100 shares of ABC, acquired in 1998. You sell the shares for a loss in August 2000 and purchase identical shares in July 2000. Financial Navigator recommends recording the transactions as follows: Record the July 2000 shares as a new asset. Record the August 2000 shares as a sale of the original 1998 shares. However, change the realized capital gain or loss account to the the July 2000 asset account. Next, go to the asset and liabilities information screen for the original 1998 shares. Change the tax basis, line 7, to the new basis in the asset (original cost less the proceeds received in the August sale). Finally, go to the asset and liabilities information screen for the July asset. Change the acquisition date to the original 1998 date. Change the tax basis, line 7, to the correct amount (the original 1998 cost, less the August 2000 proceeds plus the July 2000 purchase. This amount will reflect the increased basis. This method will report zero gain or loss on schedule D, but proceeds will agree with 1099-B.
An alternative to the above steps is the following: Enter the July 2000 purchase as an acquisition to the same account as the 1998 purchase. While entering the transaction in the multiple distribution screen, enter the acquisiton date as the same date as the original 1998 purchase. Next, enter the August sale to the same 1998 purchase. In the multiple distribution screen enter zero for quantity sold. Answer yes for "return of capital". Go to the asset and liability box and change quantity to the original shares.
The advantage of this method is fewer steps, and ease of instructions to staff. The disadvantage is that schedule D proceeds will not tie to 1099-B.
The disadvantage can be mitigated by the following: sales that do not appear on schedule D but are reported on 1099-B are probably wash sales. If you enter a memo on each "return of capital" that the transaction is a wash sale, you can look at the transaction by payee/payor reoport at the end of the year. The report will tell you that it is not on schedule D because the transaction is a wash sale.
If you have many wash sales during the year, it is better to follow the Financial Navigator method.
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m miles
Navigator User Forums
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posted 09-14-2000 12:55 PM
