Case Study 60: Wash Sales - Detailed Transactions

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Introduction
The purpose of this posting is to further demonstrate the effect of the wash rules on securities purchased 30 days before/after the sale of the same (or substantially similar) security for a loss. As there is a requirement that there be a high frequency of trading for someone to be considered a trader under the IRS standards. The purpose of this post is to examine a series of transactions at a lower level.

Problem
Taxpayer A actively trades Bitcoin in order to take advantage in short term swings in the market. The diagram below shows several transactions in February at a lower level.

Solution
Loss Calculation w/o Wash Rules

The "Loss Before Wash Sale" column shows the total loss per sale transaction. The basis attributed to each sale can be found in the "Total Cost Basis" column. The dates associated with each sale/purchase are also displayed in the "Sale Date" & "Purchase Date" columns.

Adjustment of Basis from Loss Rules

The above breaks out the addition of basis associated with each sale date ("Sale Date") and each purchase date (columns). Note that when the added basis will continued to be carried forward until sufficient gain is recognized to offset the carried forward wash sale basis with each new wash sale transaction.

References
https://steemit.com/tax/@alhofmeister/wash-sale-rules-cryptocurrency-application
https://steemit.com/tax/@alhofmeister/case-study-49-wash-sales-advanced-february

Disclaimer
Any accounting, business or tax advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties.