This is actually a really common misunderstanding about wash sales. What matters isn't the lot numbers but the timing. Whenever you have a loss sale with a purchase of substantially identical securities within the 61-day window (30 days before/after), you have a potential wash sale. I had this exact situation last year with NVDA stock - sold some at a loss and had other shares purchased within the window. My accountant explained that the way the IRS applies the rule, you look at all purchases of the same security within the window, regardless of lot designation.

This is exactly the kind of complex wash sale scenario that trips up so many taxpayers! Based on your description, you're dealing with a partial wash sale situation. Here's what's happening: You sold 140 shares at a loss, but you only have 60 remaining shares from Lot 2 that were purchased within the wash sale window. The wash sale rule will apply, but only to the extent of the shares you still hold - so 60 shares worth of your loss will be disallowed and added to the cost basis of those remaining 60 shares. The math works out like this: - Loss on 60 shares: $1,800 (60 × $30) - this gets disallowed and added to basis - Loss on remaining 80 shares: $2,400 (80 × $30) - this should be deductible Your remaining 60 shares would have an adjusted basis of $125/share ($75 original + $30 disallowed loss per share). Make sure to double-check your 1099-B when it arrives - brokers sometimes miss these nuanced partial wash sale calculations, especially with same-day transactions. You may need to make adjustments on Form 8949 if your broker doesn't report it correctly. Keep detailed records of your calculation method in case the IRS has questions later!

Watch out for the "recapture" if you ever sell! I learned this the hard way. All that depreciation you take on the rental portion gets "recaptured" and taxed when you sell. The current recapture tax rate is 25% (different from regular capital gains rates). I sold my duplex last year after owning it for 10 years and got hit with a huge tax bill because I hadn't planned for this.

One thing to keep in mind is that you'll need to keep really detailed records from day one. The IRS expects you to be able to prove your allocation method and track all expenses separately. I'd recommend setting up a separate bank account for all duplex-related expenses and keeping receipts for everything - even small repairs that might only affect one unit. Also, don't forget about utilities! If you pay for shared utilities like water/sewer or trash pickup, those get allocated between personal and rental portions too. Same goes for maintenance expenses - if you hire someone to maintain the whole property (like lawn care), that gets split, but if you fix something specific to just the rental unit, that's 100% deductible against rental income. Your accountant will definitely help you set up the right systems, but getting organized early will save you headaches at tax time!

Anyone else's WMR still saying 'still processing' even after transcript updates?

Those codes are actually a good sign! 571 means they've released any holds on your account, and 290 is typically an adjustment code (often for interest they're adding to your refund). Since your amended return shows "adjusted" status as of Dec 14th, you should see a DDD (846 code) pop up within the next 1-2 transcript update cycles. I had similar codes last year and got my DDD about 10 days later. Keep checking your transcript daily - it usually updates overnight Thursday into Friday, but can happen other days too. You're definitely in the home stretch now!

Great thread! I'm going through this process right now with my first rental property. One thing I learned that might help others - make sure to factor in your state taxes too when calculating potential savings. I'm in California with high state income taxes, so my effective tax rate on the accelerated depreciation is actually higher than just the federal rate, which made the numbers work even better. Also, if you're planning to do multiple properties, some companies offer package deals that can bring the per-property cost down significantly. I'm getting quotes for doing 4 properties at once and the cost per study drops from about $5K each to around $3K each when bundled. One question for those who've done this - do you typically do the cost segregation in the same year you purchase the property, or wait until the following tax year? I closed in December and wondering if there's any advantage to timing it one way or the other.

This is incredibly helpful! I'm a tax professional and see so many rental property owners missing out on cost segregation benefits. A few additional points that might help: **Documentation is key** - Start gathering all your purchase documents, renovation receipts, and any property improvement records NOW. The more detailed documentation you have, the better the cost segregation study will be. Even small improvements like new flooring, fixtures, or landscaping can often be reclassified. **Consider bonus depreciation** - For 2024, you can still take 80% bonus depreciation on qualifying property identified through cost segregation (drops to 60% in 2025). This means even MORE immediate tax benefits on top of the accelerated depreciation schedules. **Don't forget about Section 199A** - If you qualify for the 20% QBI deduction on rental income, the depreciation from cost segregation can actually help you maximize this benefit by reducing your taxable rental income while potentially keeping you in the qualifying income ranges. For those asking about smaller properties - I've seen studies pencil out on properties as small as $200K, especially if there have been significant renovations or if the property has unique features like pools, extensive landscaping, or high-end finishes that can be segregated into shorter depreciation lives. The key is finding the right professional who understands both the engineering side AND the tax implications. Not all cost segregation companies are created equal!

Box 14 codes can definitely be confusing! In addition to the great suggestions already mentioned, you might want to check if your employer has a benefits summary or annual statement that came with your open enrollment materials. Sometimes these documents include explanations of the various deductions and codes that show up on your W2. Also, if you have access to your employee self-service portal or HR system online, there's often a section about payroll deductions or tax documents that might have a code reference guide. Many larger companies maintain these resources but don't always advertise them well. One thing to keep in mind is that most Box 14 items fall into a few common categories: pre-tax benefits (like parking or transit), after-tax deductions (like Roth 401k contributions), or informational items (like imputed income for life insurance). If you can figure out which category your code falls into, it can help you determine if any action is needed on your tax return.

Another approach that worked for me was looking at my year-end pay statement or final paystub from December. Many employers include a year-to-date summary that breaks down all the deductions with more descriptive labels than what appears on the W2. Also, if you're still employed with the same company, you could try reaching out to a coworker in payroll or accounting - they often know these codes by heart since they deal with employee questions about them regularly. Sometimes they're more accessible than HR and can give you a quick answer. One more tip: if the amount in Box 14 matches exactly with something you remember paying for or receiving (like parking fees, gym membership reimbursement, or educational assistance), that's usually what it represents. The IRS requires employers to report certain benefits and reimbursements even if they don't affect your taxable income.