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This article applies to:

  • Product: ONESOURCE Trust Tax

Using the Automated Wash Sale Identification Process

The automated wash sale identification process enables ONESOURCE Trust Tax to evaluate the sales for an account during processing. If a sale occurs at a loss, ONESOURCE Trust Tax looks for a substantially similar purchase (referred to as a matching purchase) of the same asset (same asset ID or CUSIP) within the same account that occurred within 30 calendar days before or after the sale date (a 61-day period).
note
For calendar year and fiscal accounts, the 61-day wash sale period may include days in the prior tax year or days in the subsequent tax year.
If ONESOURCE Trust Tax finds a matching purchase within the 61-day period, the loss on the sale is disallowed. The data associated with the disallowed loss displays in the
Identified Wash Sales
 register and is included on the requested output.
If you disagree with the identification of a sale as a wash sale, you can exclude the sale from consideration by the automated wash sale identification process. See Excluding Tax Lots from the Automated Wash Sale Identification Process for details.
Wash sale disallowed loss amounts are reported on Form 1099-B and on Schedule D (Form 1041). In an Enhanced 1099 document, wash sales have their own subheading under the respective term (short-term, long-term 28% or long-term 15%).
See Setting Options for the Automated Wash Sale Identification Process to use the automated wash sale identification process.

Automated Wash Sale Identification Details

  • ONESOURCE Trust Tax evaluates the sales for an account when a processing request is submitted that is in accordance with settings for the
    Automated Wash Sale Identification
     options. To accommodate new sales and purchases and/or changes to existing sales and purchases that were bridged or manually entered, ONESOURCE Trust Tax evaluates all sales even if they were previously identified as wash sales by the automated was sale identification process:
  • Your Trust Accounting Vendor (TAV) may have a process for identifying wash sales. If so, the Wash Sale Indicator and Wash Sale Disallowed Loss Amounts are available to bridge to ONESOURCE Trust Tax.
  • When matching sales with purchases, ONESOURCE Trust Tax assumes the oldest tax lot is sold first. (First-in-first-out (FIFO) lot identification is used.)
  • A tax lot is not considered a wash sale if the acquisition date of the tax lot in the sale is the same as the acquisition date (the tax effecitve date) of the tax lot of the purchase, or if the TAV Lot ID in the sale matches the TAV Lot ID of the purchase.
  • TAV Lot IDs must be an exact match. For example, a sale with a TAV Lot ID of 000012345 is not an exact match of a purchase with a TAV Lot ID of 012345.
  • The TAV Lot ID is included in the grid under the
    Tax Lots
     collapsible section on the Sales Detail page. You can add the TAV Lot ID for sales and purchases to a custom register created from the
    Identified Wash Sales
     register. In the first grid under the
    Detail Columns
     collapsible section on the Register Properties page, the
    Lot TAV Lot Id
     column applies to sales tax lots and the
    Purchase TAV Lot Id
     column applies to purchase tax lots. Both columns are in the
    Identified Wash Sale
     category.
  • During processing, partial wash sales are split into two sales: the wash sale portion and the non-wash sale portion. The split may differ the next time a processing request is submitted. The source data for your sales is not changed in ONESOURCE Trust Tax.
  • To match units, tax lots and purchases may be split. When split, each part is identified in the
    Identified Wash Sales
     register. A tax lot is split on the worksheet only when a portion of the shares are identified as wash sales. Purchases remain as one transaction on the worksheet.
  • The Sales Summary and the Sales Detail pages in the account binder include the Wash Sale Indicator and grid fields for the federal and state wash sale disallowed loss amounts. Any tax lot that has the Wash Sale Indicator set to
    Yes
     in the grid under the
    Tax Lots
     collapsible section on the Sales Detail page is treated a wash sale even if there is no matching purchase. Additionally, when the Wash Sale Indicator is set to
    Yes
    , the tax lot is not evaluated by ONESOURCE Trust Tax. However, ONESOURCE Trust Tax will look for a matching purchase so that it is not used to identify a different sale as a wash sale.
  • When a combined main account is processed, tax lots and purchases are evaluated across all accounts in the combined account. The automated wash sale process is not applied to sub-accounts when a worksheet is processed outside of the combined main account.

Setting Options for the Automated Wash Sale Identification Process

The
Automated Wash Sale Identification
 options on the Options and Overrides page determine whether the automated wash sale identification process is used. If the process is used, these options determine the type of processing request that triggers ONESOURCE Trust Tax to evaluate sales. The
Automated Wash Sale Identification
 options must be set before processing occurs.
To use the automated wash sale identification process, set the following options to a setting other than the default,
Do Not Identify
:
  • Automated Wash Sale Identification
     in the
    Capital Sales
     category - Applies to the wash sale disallowed loss amounts reported on Schedule D (Form 1041).
  • Automated Wash Sale Identification
     in the
    Enhanced 1099
     category - Applies to the wash sale disallowed loss amounts reported on Form 1099-B.
The selections for the options include:
  • Do not identify
     - This is the default. Do not select this setting if you want to use the automated wash sale process.
  • Identify when processing a Worksheet request
     - When selected, the automated wash sale identification process is used to identify wash sales when a worksheet processing request is submitted.
  • This selection applies to only processing requests where
    Worksheet
     is selected from the
    Request
     drop-down list on the Process page or pop-up window. It does not apply to processing requests that combine a worksheet with another document type (such when
    Tax Return and Worksheet
     is selected from the
    Request
     drop-down list).
  • Identify when processing a Worksheet or Tax Return projection request
     - When selected, the automated wash sale identification process is used to identify wash sales when a worksheet or tax return projection processing request is submitted.
  • Identify when processing any type of request from the Process screen
     - When selected, the automated wash sale process is used to identify wash sales when any type of processing request (including an estimate processing request) is submitted from the Process page or Process pop-up window.
The following graphic shows that both of the
Automated Wash Sale Identification
 options are set to
Identify when processing any type of request from the Process screen
:

Setting SmartBridge Probes

The account SmartBridge probes listed below can notify you of wash sales when a worksheet or tax return is processed and can help reduce review time. The notification method depends on the setting for each SmartBridge probe. For example, a message can be added to the first page of the worksheet detail or to the
Currently Processing
 register when a wash sale is identified by the automated wash sale program.
Option
Description
Wash sales were identified by the Automated Wash Sale calculation (Does not apply to Tax Deferred Accounts)
This SmartBridge probe does not apply to accounts with an entity type of
Tax Deferred Account
. It identifies the wash sales that were identified by the automated wash sale calculation. The selections include:
  • Do not check for error
    -No message is generated. This is the default.
  • Display message on worksheet or with individual transaction or sale
    -A message is added to the first page of the worksheet detail.
  • Display message and do not process tax return
    -Tax return processing stops and a message with the Needs attention status is logged in the
    Currently Processing
     register.
  • Display message and do not process tax return projection
    -Projection processing stops and a message with the Needs attention status is logged in the
    Currently Processing
     register.
  • Display message, do not process tax return or tax return projection
    -Projection or tax return processing stops and a message with the Needs attention status is logged in the
    Currently Processing
     register.
Sales exist after Wash Sale (Does not apply to Tax Deferred Accounts)
This SmartBridge probe does not apply to accounts with an entity type of
Tax Deferred Account
. It identifies sales that exist after a wash sale is identified by the automated wash sale calculation or a ONESOURCE Trust Tax user. The selections include:
  • Do not check for error
    -No message is generated. This is the default.
  • Display message on worksheet or with individual transaction or sale
    -A message is added to the first page of the worksheet detail.
  • Display message and do not process tax return
    -Tax return processing stops and a message with the Needs attention status is logged in the
    Currently Processing
     register.
  • Display message and do not process tax return projection
    -Projection processing stops and a message with the Needs attention status is logged in the
    Currently Processing
     register.
  • Display message, do not process tax return or tax return projection
    -Projection or tax return processing stops and a message with the Needs attention status is logged in the
    Currently Processing
     register.
Tax lots exist where the wash sale disallowed loss amount entered is greater than the tax lot's loss amount (Does not apply to Tax Deferred Accounts)
This SmartBridge probe does not apply to accounts with an entity type of
Tax Deferred Account
. It identifies wash sales that have at least one tax lot where the wash sale disallowed loss amount is greater than the loss amount of the tax lot. The selections include:
  • Display message and do not process tax return
    -Tax return processing stops and a message with the Needs attention status is logged in the
    Currently Processing
     register.
  • Display message, do not process tax return or tax return projection
    -Projection or tax return processing stops and a message with the Needs attention status is logged in the
    Currently Processing
     register.

The Identified Wash Sale Register

The
Identified Wash Sale
 register displays sales that were identified as wash sales by the automated wash sale identification process and by Trust Tax users manually setting the Wash Sale Indicator for a tax lot to
Yes
 in the
Tax Lots
 collapsible section on the Sales Detail page. The register results may differ with subsequent processing requests because sales may be bridged or manually added and sales data may change between processing requests.
The
Identified Wash Sales
 register includes the following columns:
Column
Description
Account
The account number for the processed account.
Name
The account name for the processed account.
Asset ID
The unique identifier (or CUSIP) assigned to the evaluated asset.
Asset Name
The name of the evaluated asset.
Sale TAV Tran No
The TAV transaction number for the evaluated sale.
Sale Settle Date
The settlement date of the evaluated sale.
Sale Trade Dt
The trade date of the evaluated sale.
Lot Seq No
A sequential number used by ONESOURCE Trust Tax.
Lot Fed Acq Dt
The federal acquired date for the evaluated tax lot.
Lot Units
The total number of units for the evaluated tax lot.
Lot Orig Loss
The original loss amount for the evaluated tax lot.
Identified
Indicates how the wash sale was identified. One of the following displays:
  • By Trust Tax
     - Indicates the wash sale was identified by the automated wash sale identification process.
  • In Tax Lot
     - Indicates the Wash Sale Indicator was manually set to
    Yes
     by a Trust Tax user or was bridged from your TAV.
Lot Term
The term classification for the evaluated tax lot.
Lot Wash Units
The adjusted units used by the automated wash sale identification process when evaluating the tax lot.
Lot Wash Loss
The adjusted loss used by the automated wash sale identification process when evaluating the tax lot.
Purch TAV Tran No
The TAV transaction number of the evaluated purchase.
Purch Settle Date
The settlement date for the evaluated purchase.
Purch Orig Acq Dt
The acquired date for the evaluated purchase.
Purch Orig Units
The total number of units for the evaluated purchase.
Purch Orig Basis
The original basis amount for the evaluated purchase.
Purch Adj Acq Dt
The adjusted acquisition date of the tax lot that caused the loss to be washed. The adjusted acquisition date is calculated to equal the acquisition date of the oldest tax lot minus the difference in time when the shares were not owned.
Purch Adj Units
The adjusted amount of the evaluated purchase.
Purch Adj Basis
The adjusted basis amount for the evaluated purchase.
Compute date
The date the automated wash sale identification process identified the sale as a wash sale.
Creating Custom Registers from the Identified Wash Sale Register
On the Register Properties page, the first grid under the
Detail Columns
 collapsible section includes columns that provide additional details about identified wash sales. You can add these columns to custom registers created from the
Identified Wash Sale
 register.
All of the columns are in the
Identified Wash Sale
 category.

Excluding Tax Lots from the Automated Wash Sale Identification Process

You can exclude tax lots from consideration by the automated wash sale identification process if:
  • You disagree with the identification of a sale as a wash sale by the automated wash sale program.
  • You do not want to adjust the basis of the subsequent purchase because the adjustment is a de minimus amount.
To exclude a tax lot from the automated wash sale identification process, select
No
 for the Wash Sale Indicator in the grid under the
Tax Lots
 collapsible section on the Sales Detail page then select
Save
.
To remove excluded tax lots from the
Identified Wash Sale
 register, submit a processing request that is in accordance with your settings for the
Automated Wash Sale Identification
 options.

Items Excluded from the Automated Wash Sale Identification Process

The automated wash sale identification process does not:
  • Adjust your acquisition date or basis.
  • Set the Wash Sale Indicator in the grid under the
    Tax Lots
     collapsible section on the Sales Detail page.
The automated wash sale identification process does not evaluate:
  • Proceeds transactions in tax codes 519 and 521.
  • Deleted sales, tax lots or purchases.
  • Tax lots marked as Unknown Cost or Unknown Basis.
  • REMICs.