A wash sale occurs when you sell a stock at a loss and have purchased or repurchase it again within 30 days. When that happens, you are not allowed to claim the loss at the time of the sale. The loss becomes an adjustment to the basis of the stock you own and gets recognized later when you completely close out your position.

Because wash sales require an adjustment to the cost basis of your investment club stock, they will become increasingly important to account for correctly due to the new cost basis reporting rules.

If you've had any wash sales, you will need to contact us at support@bivio.com with the details so we can make the proper adjustments to your bivio records. Depending on your situation, these can be complicated entries and it can take us a little while to get to, so we'd like to recommend that you check and let us know ASAP if you need any help with this. We've already started receiving requests from clubs who have had wash sales and we expect the volume of requests for adjustments to increase as we get closer to tax filing time and 1099 forms get distributed.

How do you know if your investment club is affected? On your brokerage website, you will probably be able to find a report about your Realized gains and losses for 2011. These reports usually show the purchase details and cost basis of any shares you sold and should indicate whether a loss was a wash sale.

You should compare what is in this report to what is showing on the bivio Gains and Losses Report. This is one of the reports in the bottom section of the Accounting>Reports page. Make sure to set the year to 2011 before you run the report.

If you have had any wash sales, your bivio records will not agree with your brokerage and you should make sure to contact us at support@bivio.com to make the adjustments you need.

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Laurie Frederiksen
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