We spoke with client today with MTM but they didn’t inform the broker. This brought to light a misunderstanding that many prospective clients struggle with:

The broker inflates the 1099B cost basis (tax cost basis) to pass the wash sale disallowed losses into the following year. This makes the wash sales seem irrelevant. Be careful, a uninformed tax preparer might understate your taxable income by ignoring your wash sale penalty.

On a related subject, a recent caller ignored this very error in 2023. He convinced himself that he was fine. Now in 2026 the IRS sent the first tax return adjustment. $800,000+penalties and interest increase in tax due. 2024 and 2025 adjustments will follow.

Please remember, trader tax rules are complex, penalties are harsh and the IRS will eventually collect. Please use a trader tax specialist.