Need help with $30k wash sale on BITI - never bought back after selling?

The wash sale rule can be tricky, but from what you're describing, something doesn't add up. Wash sales occur when you sell a security at a loss and buy the same or "substantially identical" security within 30 days before OR after the sale. The key part that people often miss is the "before" part. Did you happen to purchase any BITI within the 30 days before you started selling? That would trigger the wash sale rule even if you never bought back after selling. Another possibility is if you purchased any securities that are considered "substantially identical" to BITI within that timeframe - this could include options on BITI, other inverse Bitcoin ETFs, or sometimes even related investments. Also, check if you have multiple accounts with the same brokerage or different brokerages. The IRS requires wash sale reporting across all your accounts, so purchases in one account can create wash sales for sales in another account.

I dealt with a similar situation last year and discovered that taxr.ai https://taxr.ai saved me thousands by identifying issues with my 1099-B reporting. My broker had incorrectly flagged several transactions as wash sales when they weren't. I uploaded my statements to taxr.ai and their AI tax analyzer spotted the discrepancies right away. You might want to check it out since it sounds like there could be an error on your 1099. In my case, I had sold some tech ETFs at a loss but never rebought them, yet my broker's system somehow flagged them. The taxr.ai system highlighted these transactions and explained exactly why they shouldn't qualify as wash sales under IRS rules. It also generated a detailed report I could use to dispute the characterization with my broker.

Ok I was skeptical but decided to try taxr.ai after my previous comment. Seriously impressed with the results! I uploaded my 1099-B and trade confirmations and it identified 3 transactions that were incorrectly marked as wash sales. The system explained that since I sold completely out of the position and never repurchased within the window, these shouldn't qualify as wash sales. I reached out to my brokerage with the report and they're reviewing it now. The rep actually seemed surprised by how detailed the analysis was. The report even cited the specific IRS publications and rules that applied to my situation. Whether they correct my 1099 or not, I feel much more confident about how to handle this on my tax return. If you're dealing with a similar issue, definitely worth checking out.

If you need to talk to the IRS about this wash sale issue, good luck getting through to them! I spent 3 hours on hold last week trying to get clarification about a similar issue. Then I found Claimyr https://claimyr.com and it changed everything. They actually got me connected to an IRS agent in about 20 minutes. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c - basically they navigate the IRS phone system for you and call you when they get a representative on the line. I was super skeptical at first but desperate after multiple failed attempts. When I finally spoke with an IRS agent, they confirmed that if I never repurchased identical securities within the wash sale window, I should dispute the characterization with my broker.

I take back what I said earlier. After a particularly frustrating day trying to get through to the IRS about my own wash sale questions (got disconnected THREE times after 45+ minute holds), I tried Claimyr out of desperation. Within 35 minutes, my phone rang and I was talking to an actual IRS agent. The agent confirmed that if I completely exited a position and didn't repurchase within the wash sale window, those transactions shouldn't be considered wash sales. She recommended I contact my broker with documentation of all my trades showing I completely exited the position. If the broker won't issue a corrected 1099, she said I should file my taxes correctly based on actual transactions and include an explanation statement. Seriously, being able to actually talk to someone at the IRS made all the difference in understanding how to address this.

Check if you bought any BITI in your retirement accounts too! The wash sale rule applies across all accounts, including IRAs. A lot of brokers don't report this correctly because they don't have visibility into your other accounts, but the IRS still expects you to follow the rules. I learned this the hard way last year when I sold ARKK at a loss in my taxable account but had bought some in my Roth IRA two weeks earlier. Had to manually adjust my return and lost a $7k deduction I thought I was going to get.

Has anyone tried using the tax transcript request on the IRS website instead of calling? I find it super helpful to see what the IRS actually has on file before panicking about broker reporting errors.

This is a really frustrating situation, but I think I can help clarify what's happening. Based on your description that you bought BITI shares 2 weeks before you started selling, you're actually experiencing a textbook wash sale scenario - even though it feels counterintuitive. Here's the key: when you sold your older BITI shares at a loss, the wash sale rule kicked in because you had purchased "substantially identical" securities (more BITI) within the 30-day window before those sales. It doesn't matter that you eventually sold everything - each sale transaction is evaluated independently. What likely happened is this: Your losses from selling the older shares got disallowed and added to the cost basis of the newer shares you bought. When you eventually sold those newer shares, you should have gotten credit for those previously disallowed losses through the adjusted basis. The $30k disallowance doesn't mean you lost that deduction forever - it just got deferred. I'd recommend carefully reviewing your 1099-B to see if the basis adjustments for your final sales properly reflect the wash sale additions. If the math doesn't add up, then you might have grounds to dispute it with your broker. The key is making sure those disallowed losses eventually got recognized when you sold out completely.