The taxpayer buys 100 shares of X stock for $1,000. The taxpayer sells these shares for $750 and within 30 days from the sale buys 100 shares of the same stock for $800. Because the taxpayer bought substantially identical stock, the taxpayer cannot deduct the loss of $250 on the sale. However, the taxpayer adds the disallowed loss of $250 to the cost of the new stock, $800, to obtain the basis in the new stock, which is $1,050.
The wash sale is reported in Box 1g of Form 1099-B.
Note: Wash sales are in scope only if reported on Form 1099-B or on a brokerage or mutual fund statement.
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A wash sale is the sale of securities at a loss and the acquisition of same (substantially identical) securities within 30 days of sale date (before or after). When you have a nondeductible loss from a wash sale, report the sale or exchange on Cap Gn Wkt and enter the amount of the nondeductible loss as a positive number in column (g).
