SNOW Household Wash Sale Recovery: Cross-Custodian Replacement Path
PROOF LOG #029
SNOW Household Wash Sale Recovery: Cross-Custodian Replacement Path
One household. Multiple custodians. One hidden replacement path.
A custodian-level view may not show where a denied loss lives after replacement shares are purchased elsewhere.
FDL verifies the prepared replacement-basis and recovery path through Audit Trail, Tax Report, and Tax Alpha Dashboard.
One household. Multiple custodians. One hidden replacement path.
A household wash sale does not end when the loss is denied.
The denied loss has to live somewhere.
In this SNOW case, the prepared MFJ household records connect a husband-side Morgan Stanley loss sale to a spouse-side Schwab replacement lot, with no IRA replacement.
FDL verifies the prepared replacement-basis and recovery path.
One household ≠ one custodian view.
Proof Summary
Problem: A custodian-level view may not show the full MFJ household replacement path.
Prepared input: Husband taxable Morgan Stanley SNOW loss sale. Spouse taxable Schwab replacement buy. No IRA replacement.
Board result: Audit Trail shows the preserved basis path. Tax Report shows the later sale result. Tax Alpha Dashboard shows wash-sale basis recovery.
Boundary: This is a CPA-prepared household wash-sale position for prepared, in-scope records. FDL verifies the path; it does not make the filing judgment.
WATCH THE RECONSTRUCTION
Watch the denied loss move into the replacement lot, then come back out when that lot is sold.
This proof assumes a CPA-prepared MFJ household wash-sale position, a taxable spouse replacement account, and no IRA replacement.
- one household, two custodians
- husband SNOW loss sale creates a $50,000 denied loss
- spouse Schwab taxable account buys replacement shares
- replacement basis moves from $400,000 to $450,000
- later sale proceeds are $451,900
- Tax Report shows $1,900 SHORT gain
- Tax Alpha Dashboard shows Wash Sale Basis Recovery $50,000 Realized
- no IRA replacement
EXECUTIVE PROOF
Custodian-Level Gap
- Morgan Stanley sees the husband-side SNOW loss sale
- Schwab sees the spouse-side SNOW replacement lot
- the replacement-basis path lives across household records
- the reviewer needs the MFJ household path, not just account surfaces
FDL Registry of Truth™
- prepared MFJ household records are reviewed in one run
- Audit Trail preserves the replacement-basis path
- Tax Report shows Code W on the denied loss and the later sale result
- Tax Alpha Dashboard shows $50,000 Wash Sale Basis Recovery
STEP 1-1 — LOSS DENIED
The husband-side Morgan Stanley account sells SNOW at a loss.
The spouse-side Schwab taxable account buys replacement shares within the household path.
No IRA replacement is involved.
Under the CPA-prepared household position, the $50,000 loss is denied.
STEP 1-2 — BASIS PRESERVED
The denied loss is preserved into the spouse replacement lot.
The spouse lot cash basis is $400,000.
The prepared replacement basis becomes $450,000.
The denied loss did not disappear. It moved into the replacement lot.
STEP 2-1 — LATER SALE
The spouse replacement lot is later sold.
Tax Report shows proceeds of $451,900.
Tax Report shows basis of $450,000.
The filing-facing result is $1,900 SHORT gain.
STEP 2-2 — BASIS RECOVERED
Tax Alpha Dashboard shows Wash Sale Basis Recovery $50,000 Realized.
Audit Trail keeps the replacement path reviewable.
FDL makes the recovery path visible without turning the post into a generic wash-sale explainer.
FORENSIC EVIDENCE
What must remain intact
- MFJ household scopeThe husband-side loss sale and spouse-side replacement lot must be reviewed in one prepared household run.
- Taxable spouse accountThe replacement purchase is assumed to be in a taxable spouse account, not an IRA.
- Prepared positionThe household wash-sale treatment is a CPA-prepared reporting position.
What FDL makes legible
- Tax ReportShows Code W on the loss sale and $1,900 SHORT gain on the later sale.
- Audit TrailShows the preserved basis path into the spouse replacement lot.
- Tax Alpha DashboardShows $50,000 Wash Sale Basis Recovery Realized.
- Replacement basisShows the spouse lot basis moving from $400,000 to $450,000.
This is the point of the white-box architecture:
denied loss, replacement basis, later sale result, and recovery visibility stay separate and reviewable.
WHY THIS CASE MATTERS
UHNW households do not always trade from one account.
Custodians see account surfaces.
CPA teams need the household path.
The value is not generic wash-sale detection.
The value is reviewable replacement-basis recovery.
WHAT FDL IS SHOWING HERE
FDL verifies prepared MFJ household records.
FDL verifies a taxable spouse replacement path.
FDL verifies denied-loss basis preservation and later-sale recovery.
FDL shows Tax Report result, Audit Trail support, and Tax Alpha Dashboard visibility.
The denied loss did not disappear. It moved into the replacement lot. FDL made the recovery path reviewable.
WHAT FDL IS NOT CLAIMING
FDL is not replacing CPA judgment.
FDL is not claiming tax savings.
FDL is not auto-discovering household truth.
FDL is not overriding a broker as a legal conclusion.
FDL is not modeling an IRA replacement case here.
WHAT FDL IS VERIFYING
FDL verifies prepared, in-scope records.
FDL verifies the household replacement path after records are brought into one prepared run.
FDL verifies the basis recovery path through Tax Report, Audit Trail, and Tax Alpha Dashboard.
One household is not the same as one custodian view.
CHOOSE YOUR NEXT STEP
FDL — deterministic tax infrastructure for prepared, in-scope records.