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Wash sales

minnow150
Level 2

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

 

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rbynaker
Level 11

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.

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rbynaker
Level 11

What happened to the warrants?

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minnow150
Level 2

Warrants were disposed in 2020.

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rbynaker
Level 11

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.

View solution in original post

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.

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