Wash Sale Adjustments: Impact On Cost Basis Reporting
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Overview: Wash sale adjustment is one of the key components of cost basis adjustments. The author has used transactional analysis to explain the complexities, reconciliation techniques and recommendation of wash sale adjustments.
In this paper, the concept of sub-lot is introduced to track wash sale adjustments of high volume. This will facilitate reconciliation between the broker and taxpayer, identification of wash sales adjustments and will help to provide explanation to IRS (Internal Revenue Service) inquiries.
Also, this paper deals with the complexities faced by accounting products and cost reporting engines and helps to build simulations and illustrations for complex securities.