How to Post Wash Sales on Schedule D
Wash sales are when an investor sells stock at a loss, then buys the same or identical stock either 30 days before or after the original sale. Only stock deals involving wash sales in the ordinary course of business may deduct losses from wash sales. The basis of the identical stock purchased equals the cost of the stock plus the loss from the sale.
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Instructions
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1
Determine if the loss from the sale of the stock is a short-term or long-term capital loss. A short-term loss is generally held for less than a year, while a long-term loss is generally held for more than a year.
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2
Enter the information on the sale of the stock on Form 1040 Schedule D on Line 1 or Line 8, depending if the loss was short-term or long-term. Line 1 is located in Part 1--Short-term Capital Gains and Losses, and Line 8 is in Part 2--Long-term Capital Gains and Losses. In column F in the section in which the taxpayer reported the transaction, enter the loss from the sale as a negative number.
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3
Enter "Wash Sale" directly under the sale of the stock reported in Step 2 in column A. In column F, enter the loss from the sale as a positive number.
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