Wash sales

Forum|Forum|5 years ago
March 29, 2021
4 replies
38 views

Taxpayer was active buying and selling a petroleum company's stock in 2020, generating $40,000 in short-term losses offset by $36,000 in wash sale disallowances (as per the 1099-B). In November 2020, the company went through Chapter 11 and his stock was exchanged for warrants to purchase fewer shares at a later date.

In the exchange of the stock for warrants, the basis does not include the $36k of disallowed wash sales. Since the taxpayer does not have the stock anymore, how can I get Lacerte to recognize the $36k of capital losses?

Thanks.

Mike Gilligan

ProSeries Professional

This topic has been closed for replies.

Best answer by rbynaker

Then I agree with Phoebe's excellent answer over on the other thread:

https://proconnect.intuit.com/community/lacerte-tax-discussions/discussion/wash-sales/00/150358

My slight hesitation was that if the warrants were exercised to purchase "new and improved" company stock (which might be substantially equivalent to the crappy old company stock) within 30 days, the wash sales may continue to roll.

Since everything was disposed of in the same year you don't have to wait and see if anyone can come up with a valuation for the warrants.

rbynaker

Level 13

What happened to the warrants?

M

minnow150Author

Level 2

Warrants were disposed in 2020.

rbynakerAnswer

Level 13

Then I agree with Phoebe's excellent answer over on the other thread:

https://proconnect.intuit.com/community/lacerte-tax-discussions/discussion/wash-sales/00/150358

My slight hesitation was that if the warrants were exercised to purchase "new and improved" company stock (which might be substantially equivalent to the crappy old company stock) within 30 days, the wash sales may continue to roll.

Since everything was disposed of in the same year you don't have to wait and see if anyone can come up with a valuation for the warrants.

qbteachmt

Level 15

"over on the other thread"

It really helps not to keep starting the same topic over and over. Now you have help from the same community in two places. It's good that this was identified as Duplicate, to reduce the amount of work from the volunteers, starting from scratch, again.

I will mark the other one, too.

Don't yell at us; we're volunteers

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