"Wash sale loss disallowed" on your 1099-B, decoded

Short answer: "wash sale loss disallowed" (Form 1099-B, box 1g) is the loss your broker couldn't let you deduct because you re-bought the same security within the 61-day window — in that account. It's usually a deferral, not a destruction: the amount was added to your replacement shares' basis per IRS Pub 550, and you recover it when you exit cleanly. The dangerous parts are what box 1g may leave out.

Why the number can be shockingly large

Active traders re-buying the same ticker roll each disallowed loss into the next lot's basis, and each subsequent loss sale can be bigger (it carries the prior adjustment). Box 1g adds up every disallowance event during the year — so a trader who churned one falling stock twenty times can show a 1g figure several times their actual drawdown. It's the pattern behind the widely reported Forbes story of a Robinhood trader who may have faced an $800k tax bill on $45k of profit (2021; the trader was unnamed and the figure was a preliminary tax-software estimate, not an IRS assessment): mostly optics and timing — unless one of the exceptions below applies.

"But I sold everything!" — the year-end unwind

If you closed the position completely and didn't re-enter for 31+ days (in ANY account), the deferral chain unwinds: the final sale used the accumulated (higher) basis, so earlier disallowances came back as a smaller gain or bigger loss on the last rows. The 1099-B still displays the disallowed amounts in 1g — that's historical record, not a live penalty. Two gotchas keep it from unwinding: re-entering within 30 days after the sale, even across New Year (a December 21 loss is washed by a January 11 re-buy, and the disallowed amount moves into the new shares' basis — rule mechanics), and re-entering in an account the selling broker can't see.

What box 1g may leave out (the real risk)

• Cross-account and cross-broker washes. Brokers must report only identical securities within one account, though they may report more. A broker can't see a re-buy at another broker, and a re-buy in your spouse's account isn't required to reach your box 1g, so either may be missing — but the IRS counts it, and whatever your 1099-B leaves out is your job on Form 8949, code W (TurboTax steps).
• IRA absorptions. A re-buy inside your traditional or Roth IRA doesn't just defer the loss — per Rev. Rul. 2008-5 it destroys it permanently, and your 1099-B isn't required to show it (full explainer).

What to do in February

1. Don't panic at the 1g number — most of it is usually deferral accounting.
2. Reconcile across ALL your accounts: drop every broker's CSV into our free checker (in your browser, nothing uploaded) and compare its cross-account view against what your 1099-Bs show. Where the two differ, the Form 8949 instructions (code W) have you enter the correct disallowed amount in column (g), with a statement if it is less than box 1g.
3. Bring the year-end summary to your CPA — especially if any replacement landed in an IRA.

Frequently asked questions