Trading Platform Wash Sale Loss Disallowed Question - Why Are My Entire Losses Disallowed?

Wait, so even 1 single share out of what might have been hundreds or thousands of shares can trigger this? That seems incredibly restrictive. Does the rule apply differently if the remaining position is tiny compared to what was sold?

The IRS doesn't have a de minimis exception for wash sales - even 1 share is enough to trigger the rule. The percentage of your overall position doesn't matter. What matters is whether you maintain any position in a "substantially identical" security. The logic behind this is to prevent tax-loss harvesting while maintaining economic exposure to the same security. From the IRS perspective, as long as you have any shares, you haven't truly exited your investment position.

How does it work with options trading? I do a lot of covered calls and sometimes buy back positions at a loss, and I'm completely confused about how wash sales apply there.

Does it actually save you money or is it just another expense during tax season? I'm already paying enough for my tax software and really don't want to shell out more cash just to understand what should be clearly explained on my 1099.

It works really well with options trading - it can identify wash sales between stocks and their related options, including situations where you're doing covered calls or protective puts. The system flags when you've created a position that might trigger a wash sale across different securities. As for cost vs. value, it ended up saving me thousands in deductions I would have missed. My 1099 showed over $8,000 in disallowed losses, but the analysis showed how I could properly claim about $5,500 of those losses by understanding exactly which transactions were problematic and how to fix my situation. The fee was well worth it compared to what I saved.

How does this service actually work? Is it legit to have someone else call the IRS for you? I thought they had strict privacy rules about discussing your tax info.

Sorry, but I find it hard to believe this works. I've been told repeatedly by tax pros that there's no "secret number" or way to jump the queue with the IRS. They're understaffed and overwhelmed - no service can magically get you to the front of the line.

They don't call on your behalf - that would indeed violate privacy rules. Instead, the service monitors the IRS phone lines constantly and alerts you the moment they detect an open line. Then you make the call yourself right when they tell you to, so you get through instead of hitting the busy signal. You're still the one talking to the IRS, providing your own info, etc. The reason it works is that most people give up after a few tries, but their system is constantly dialing and can detect when lines open up. It's basically just solving the timing problem of when to call, not providing any special access. Think of it like having someone continuously try the door until they find it unlocked, then they tell you to walk through.

I used TurboTax last year and it handled the 1099-B import fine, but it doesn't really explain wash sales well. It just takes whatever wash sale adjustment your broker reports. If you disagree with your broker's calculation (like OP's situation), TurboTax won't help you figure that out - you'd need to make manual adjustments. I switched to TaxAct this year and it seems to handle it a bit better with more explanations about the wash sale calculations.

Thanks for the info about TurboTax. I'm concerned about the imports because my broker (Fidelity) sometimes categorizes things differently than TurboTax expects. I hadn't considered TaxAct - might check that out instead. Really just want something that will handle the calculations correctly without me having to become a wash sale expert. The whole "substantially identical securities" thing gets really confusing especially with ETFs that have overlap.

Yes, buying in your IRA after selling at a loss in your taxable account does trigger a wash sale! This is a common misconception. If you sell a security at a loss in your taxable account and purchase the same or "substantially identical" security in your IRA (Roth or Traditional) within 30 days before or after, the wash sale rule applies. What makes this particularly painful is that when the loss is disallowed due to an IRA purchase, that loss is essentially lost forever since you can't adjust the cost basis in an IRA.