Fund Manager can optionally calculate wash sales when reporting capital gains. From within any report window use the "Use Wash Sale Rules" option in the Report Preferences - Capital Gains Dialog to turn on or off wash sale calculations. Wash sale support is available in the Professional and Advisor versions only.
A wash sale will be reported when you sell shares at a loss, and buy replacement shares within 30 days before or after the sale.
Example: You sold 100 shares of IBM at a loss on August 25. On September 5 you bought 100 shares of IBM. The sale on August 25 is a wash sale.
The wash sale period is a total of 61 calendar days (not trading days): 30 days prior to the sale, the day of the sale, and 30 days after the sale. The wash sale period is inclusive of these ending dates.
When a wash sale occurs the following actions are taken:
On the capital gain reports a wash sale will be followed by an entry titled "Wash Sale Adjustment: <Investment>". This wash sale adjustment line will contain a value for shares, date bought, and gain. The shares field displays the number of replacement shares identified for this wash sale. The date bought field displays the date these replacement shares were purchased. The value in the gain column displays the amount of the disallowed loss. The disallowed loss is added into the basis of the replacement shares, such that when the replacement shares are sold, the gain will be reduced, compared to if these had not been replacement shares. When the replacement shares are sold the "Bought" date column in the capital gain reports will show an entry like:
which means that the shares were actually purchased on 9/16/08, but for purposes of calculating the holding period the 5/14/08 date was used. The 5/14/08 date in this example would be the date the replaced shares were purchased.
In the case that only a portion of the shares from a wash sale were repurchased, the disallowed loss is proportional to the number of shares repurchased in the wash sale period.
For the purposes of wash sale checking, separate blocks of shares are treated separately. When wash sale checking is enabled each separate block of shares will be reported on its own line in the capital gain reports. When wash sale rule checking is disabled each line will report on a single sale transaction, lumping all related purchases for a given holding period into the one line item.
When searching for replacement shares Fund Manager uses the rule that in order for shares to be considered replacement shares they must have been purchased after the shares they would be replacing.
For further information on wash sales the following web sites may be helpful:
http://www.irs.gov (Search for Publication 550)
Capital Gain Report
Report Preferences - Capital Gains Dialog