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This past year I started heavy day-trading of option contracts. I was aware of the wash sale rule... however when I received my 1099-B the wash-sale calculations are significantly different than I expected.

One example of this is with BGFV.

On my 1099-B the totals for BGFV are as follows...

  • Proceeds: (-459.28)
  • Gain/Loss: (-347.96)
  • Wash Sale Loss Disallowed: 111.32

The below trades are the ONLY transactions against BGFV for the entire year.

Note: observe that I opened a Short position on Calls

# Timestamp Description Amount Commission Reg Fee
1 11/10/2021 10:09:49 Sold 1 BGFV Nov 19 2021 60.0 Call @ 2.4 239.34 0.65 0.01
2 11/10/2021 10:52:29 Bought 1 BGFV Nov 19 2021 60.0 Call @ 3.5 -350.66 0.65 0.01
3 11/11/2021 15:24:19 Sold 1 BGFV Nov 19 2021 60.0 Call @ 2.02 201.34 0.65 0.01
4 11/11/2021 15:29:57 Sold 1 BGFV Nov 19 2021 60.0 Call @ 3.24 323.34 0.65 0.01
5 11/11/2021 15:42:37 Bought 2 BGFV Nov 19 2021 60.0 Call @ 3.8 -761.32 1.30 0.02

Given the above information...

  • Trades #1 & #2 (239.34 - 350.66 = -111.32) which is the same as my 1099-B shows as disallowed
  • wash sale was triggered by trade #3
  • no wash sale triggered by trade #4 (wash sale only affected 1 contract)

Question: On trade #5 when I sold my remaining 2 contracts why did I not exit the wash sale? The trades were placed in mid-November so there was more than 30 days after I exited the trade until the end of the year.

I am confused as to why my 1099-B shows a Wash Sale Loss Disallowed of: 111.32. Can someone explain what I needed to do to properly exit the wash sale so the loss would have been allowed?

I understand that buying the same security within 30 days before/after will trigger a wash sale. My understanding is the Cost/Basis is added to the next trade... so closing out the entire position should have resulted in the wash sale loss being allowed

I do my own taxes and this is the 1st year I have ran into this... any help would be appreciated

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  • Note that the loss is not disallowed - it's just deferred until you close out your position, which in this case was on 11/11 (assuming you made no other trades on similar options). Hopefully you discovered that and still claimed the loss on your 2021 taxes.
    – D Stanley
    Nov 2 at 18:18

1 Answer 1

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Your analysis is correct. It was a wash sale and the carry forward loss was resolved when you exited the position completely and remained out of it for 31 days.

My broker handles it the same way. The 1099-B only shows the disallowed loss. However, on the broker's 'Worksheet For Form 8949', it adds that so called 'disallowed loss' back in after subtracting the total Cost Basis from total Sales Proceeds. Do you have an 8949 form?

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  • My Broker is TD Ameritrade... the form they provides has numerous references to Form 8949... I took a screenshot of the relevant section... here I think you are correct as the total loss according to the transactions is: -347.96
    – SoonGuy
    Feb 4 at 19:21
  • it looks like the 111.32 is being counted twice... once during the wash & again on carry forward... so the disallowed wash sale is effectively cancelled out by the double counting of 111.32
    – SoonGuy
    Feb 4 at 19:30
  • Yes, the total loss is -$347.96 but I offer no knowledge of how TD handles it. Feb 4 at 19:51

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