Cost Basis on Fidelity Changes After Selling Contracts
- Main Problem: The user, Cheese, is concerned about a drastic change in cost basis (CB) displayed in ActiveTrader Pro after selling 5 contracts with the highest CB and is seeking clarification on whether this is a glitch or a regulatory issue.
- Solution: Fidelity’s representative, Shea, explains that the change may relate to wash sale rules, which involve the timing and replacement of sold securities.
- Resources Provided: Shea shares links to IRS Publication 550 and Fidelity’s wash sale rules for further understanding of the topic.
- Tracking Responsibility: Shea notes that Fidelity tracks wash sales within a single account but it’s the account owner’s responsibility to track them across multiple accounts.
- Advice: The user is advised to consult a tax advisor for proper reporting of any wash sale transactions.
Here’s the full thread
I am looking at the Specific Lots for ActiveTrader Pro and noticed that my CB changes drastically after I sold 5 contracts with the highest CB. Why is this and could you provide the regulatory documentation for why it does change if it is not a glitch within the platform.
Does not seem as though I can provide the before and after screenshots
The Change that I have screen shots of
Specific Lots displayed
5 Contracts of .27
1 Contract .07
1 Contract .06
1 Contract .05
10 Contracts of .05
After I sold the 5 Contracts of .27
Specific Lots displayed
1 Contract .32
1 Contract .19
10 Contracts of .12
1 Contract of .07
Hey there, @Cheese, it sounds like you’re looking at wash sales.
The IRS defines a wash sale as a sale or other disposition of stock, or securities, on which the seller realized a loss and within a 61-day period (beginning 30 days before and ending 30 days after the date such a sale or disposition took place) replaces it with stock or securities that are “substantially identical.” More specifically, the wash-sale rule states that the tax loss will be disallowed if you buy the same security, a contract or option to buy the security, or a substantially identical security.
The resources below may also prove useful for understanding wash sales further.
IRS Publication 550: https://www.irs.gov/pub/irs-pdf/p550.pdf
Wash Sale Rules: https://www.fidelity.com/learning-center/personal-finance/wash-sales-rules-tax
Fidelity’s system will track wash sales within a single account for the same security. For the wash sales we can track, we will adjust your cost basis information for you, and are generally marked with a “W” on your Positions page. However, in cases where we cannot track trades causing a wash sale, it’s up to the account owner to track them. This can include trades in two different accounts or of substantially identical securities.
Keep in mind that wash sale rules apply to you as an investor, rather than to just one of your accounts. While Fidelity’s systems will only track wash sale activity that occurs in the same account, the IRS may take a more strict view and would consider all of your accounts across all institutions in which you invest. A tax advisor is your best resource to ensure any such transactions are properly reported.
Let us know if we can answer any other questions that come up! 🟢