Reply To: Dreaded Form 8949 with many trades

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#15094
Kaye Thomas
Moderator

IRS provides exceptions to the need to list individual transactions on Form 8949. See page 3 of the instructions for that form. The first exception says transactions the broker has reported without certain adjustments can be aggregated and reported on a single line. Unfortunately, they don’t allow this for transactions showing a wash sale adjustment.

The second exception says you can attach a statement containing all the same information in a similar format. Form 1099-B wouldn’t qualify as it doesn’t show all the same information: it omits gain or loss. Your own spreadsheet could qualify, but there’s a problem in that it doesn’t report wash sales.

You say you would pay more tax, not less, when you ignore the wash sales. Normally the opposite is true, so this leads me to question whether there’s some other discrepancy between your spreadsheet and the report you received from the broker. Ignoring wash sales could lead to higher tax this year if you had wash sales last year, leading to higher adjusted basis for securities you sold this year. But in that case you would have underpaid tax last year.

Is it just electronic filing you want to avoid? Or also using software to prepare your return? If the former, you can use software and opt for paper filing. If the latter, be aware you may be able to prepare your return manually while relying on special purpose software designed for the specific purpose of handling large numbers of securities trades.

However, you still have the option of using your spreadsheet, without all the wash sale adjustments, if it provides the information required on Form 8949 and doesn’t result in a lower tax. IRS doesn’t officially permit this, but they also have better things to do than bother taxpayers who appear to be paying more than necessary.

  • This reply was modified 6 months, 3 weeks ago by Kaye Thomas.