Consider the following scenario with wash sale processing where a sale of 1000 shares produced a $10,000 loss that qualifies as a wash sale for tax purposes. The remaining lots

appear as follows in each basis.

How Same Lot Selection Affects Other Close Transactions

Same lot select

How Same Lot Selection Affects Global Processes

Sell Shares without Same Lot Selection

Now assume that you are not using same lot selection processing. If the system processes a subsequent sale for 1,000 shares with a lot selection method of high current cost for each basis, the system selects lot 2 in the GAAP basis, but selects lot 1 in the USTAX basis due to the modified cost of $20,000.  

In the GAAP basis, lots 1 and 3 remain. In the USTAX basis, lots 2 and 3 remain. The lot structure across the bases is no longer in sync.

Sell Shares When You Use Same Lot Selection

This scenario assumes the same holdings remain before a sell, but in this case the system used same lot selection. 

Assume that you previously set up the entity to assign a controlling and a non-controlling accounting basis, as follows:

• NON-CONTROLLING BASIS. Primary basis is GAAP, and does not use wash sale processing. 
• CONTROLLING BASIS. Secondary basis is USTAX, and uses wash sale processing. 

In this instance, the system processes a subsequent sale for 1,000 shares with a lot selection method of high current cost for each basis, The system first determines the lot selection results for the controlling basis, USTAX. It then attempts to relieves the lots for the non-controlling basis, GAAP, using the same lots that it relieved for the controlling basis. The system relieves lot 1 in the USTAX basis and relieves the same lot in the GAAP basis.

In the GAAP basis, lots 2 and 3 remain. In the USTAX basis, lots 2 and 3 remain. The lot structure across the bases is in sync.