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Wash Sales and Fills vs Lots, also see Original Lots from Fills
Posted by Henry Gage on 02 February 2010 07:47 PM
Regarding: Wash Sales and Fills vs Lots, also see Original Lots from Fills

Question:
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When I turn wash sales on my, Schedule D explodes from 72 pages to 1077 pages. I do not understand why it breaks up transactions into multiple parts when doing wash sales. Attached is an example. I have tried messing around with the 'Fills vs Lots' average time between first and last fill. I have changed this anywhere from 5 seconds, 5 minutes to 5 hours. At one point I managed to get a Schedule D that was only 122 pages, but I have also managed to get Schedule Ds anywhere from 774 to 1077 pages (by messing around with average time between first and last fill). How do I get TradeAccountant to stop breaking up transactions with wash sale on?
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Answer:
Tax lots are fragmented by the algorithm because it must keep track of the original opening date from the original trade that started a sequence of wash triggers. When positions are bought and sold in dissimilar quantities then tax lot groups get fragmented.

Use Properties/Wash Sales/Fills vs Lots to adjust the time span that TA uses to ignore opening trades by considering them as part of the same lot. In other words the same lot does not wash it self. If you bought at qty 1,000 of XYZ at 14:01 and got filled with 500 @ 14:03, 300 @ 14:04 and 200 @ 14:12 this would appears as three trades and could result in two wash sale trigger events. However by setting the span to 00:00:30 the wash sale routine would not allow them to wash each other.

Another work around is to use Tools/Original Lots from Fills. This does a review of your trades and combine multiple files into larger lots. The math affect of the gain/loss is the same but this can make a large difference with wash sales by removing the same lot trades. If you bought at qty 1,000 of XYZ at 14:01 and got filled with 500 @ 14:03, 300 @ 14:04 and 200 @ 14:12 this would appears as three trades. However by running Original Lots from Fill if the price of the three lots is the same then the result is @ 1,000 or XYZ @ 14:01. In this case there is no wash sale.


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