Interesting Wash Sale Situation

[anitya]

I bought two lots each of 300 shares of X on Jan 1, 2020.   On Jan 20, 2020, I sold 300 shares of X (lot 2, the later in time purchase by specific identification) for a loss.  Vanguard says the loss is deferred and added to the cost basis of the 300 shares retained.  ("Situation 1")  Of course, they are applying the 30 day wash sale rule literally.  Have you guys seen wash sale rule applied in a similar situation?

Situation 2 - I place a market order to buy 600 shares of X on Jan 1, 2020.  A 300 share purchase is triggered at $100 per share and another 300 share purchase is triggered at $101 per share.  On Jan 20, 2020, I sell 300 shares of X at $91 per share, resulting in a $3,000 loss - high cost lot is specifically identified.  I retain the other 300 shares.  Is the loss allowed or deferred as above? 

Situation 3 - I buy 600 shares of X on Jan 1, 2020 under a limit order.  I sell 300 shares on Jan 20, 2020 for a loss.  I retain the other 300 shares of X.  Is the loss allowed or deferred as above?

Thanks for your thoughts.

[yogibearbull]

Are your dates correct? Your transaction is well within +/- 30 days wash-sale window.

Lot ID doesn't change anything.

1/1/20 was a holiday.

But the loss is only deferred, not gone.

[anitya]

I am only asking to share your experience with each of the situations mentioned in OP. I am not asking anybody to do tax research for me if they do not have experience with those situations. Do not worry, I will do my own tax research and I will not debate your answers in the public forum. If you feel more comfortable, please send me a private message.

The OP already said, "Of course, they are applying the 30 day wash sale rule literally."

My transactions were in April 2020. To make it easy for the reader, I changed it to January 1 but it makes no difference whether January 1 is a holiday or not for purposes of IRC section 1091.

I used the word "deferred" which means not permanently gone, unlike Vanguard which used the word "disallowed" in this context - I am OK with their usage.

[anitya]

FWIW, I would check Vanguard's cost basis reporting and realized gain / loss calculations. More than any other firm, I expected Vanguard to be on top of it. I checked today one mutual fund sales (with no dividends reinvested) and they were off by a few thousands of dollars - it was not complicated to figure it out using info from transactions tab (three purchases, each with all zeros except the first number, and three sales). I never check brokerages' reporting of cost basis, sale proceeds, and gain / loss calculations, but in this case all sales were recent and the purchases were big round numbers and I happen to have a sense for how much gain was recognized. Seems like I need to start keeping transaction records and check Brokerages' numbers.

I sent an email message to Vanguard with my calculations, asking them to correct their records.  Will wait for a week to see what they come back with.