Losing money on day trading

I thought "wash sale" only applied over two tax years.

If you sell a stock that has a loss on Dec 26 and buy it back on Jan 2 is a violation of the 'wash sale" rule. The IRS reasoning would be you have taken the loss only for tax purpose as you had some gains you wanted to off-set or protect. But if you immediately buy it back you have re-established your long term position but have taken a "loss" for tax purposes

This is what Kirk Kerkorian did with a portion of his GM stock. Sold some in Dec but could not buy it back until 30 days after his sale, which he did.

Hopefully someone can clarify this as I am not positive I am correct.

SteveD
 
Quote from SteveD:

I thought "wash sale" only applied over two tax years.

If you sell a stock that has a loss on Dec 26 and buy it back on Jan 2 is a violation of the 'wash sale" rule. The IRS reasoning would be you have taken the loss only for tax purpose as you had some gains you wanted to off-set or protect. But if you immediately buy it back you have re-established your long term position but have taken a "loss" for tax purposes

This is what Kirk Kerkorian did with a portion of his GM stock. Sold some in Dec but could not buy it back until 30 days after his sale, which he did.

Hopefully someone can clarify this as I am not positive I am correct.

SteveD
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I find that rule very very confusing. What I thought was right has been contradicted by another poster here. I can buy his explanation too.

Next year I'm going to have an accountant do my taxes as I'm an equities AND FX trader... I'll let him figure it out...

If I were you, just google wash sale... you'll sooner or later come across IRS' official publication which right now escapes me...
 
Quote from SteveD:

I thought "wash sale" only applied over two tax years.

If you sell a stock that has a loss on Dec 26 and buy it back on Jan 2 is a violation of the 'wash sale" rule. The IRS reasoning would be you have taken the loss only for tax purpose as you had some gains you wanted to off-set or protect. But if you immediately buy it back you have re-established your long term position but have taken a "loss" for tax purposes

This is what Kirk Kerkorian did with a portion of his GM stock. Sold some in Dec but could not buy it back until 30 days after his sale, which he did.

Hopefully someone can clarify this as I am not positive I am correct.

SteveD
More...

you are wrong. wash sale rules apply no matter what month you do it.

"But if you immediately buy it back you have re-established your long term position but have taken a "loss" for tax purposes"
this is exactly what the irs does not allow. it is called loss shifting.
 
Those programs are really expensive and could add up to thousands of dollars for an active trader. Going to an accountant will be even more. If you want to save some money you can try your hand at downloading to msmoney but it never worked out for me doing that. I just copy and paste the trades right from my broker to a word document then add all the necessary columns and totals, that's it. I did 1500 trades in a few days work on a word document, title it Schedule D Continuation.
 
Quote from vhehn:

not exactly right. if he had a long that he sold for a loss then immediately bought it and sold it within 30 days it would not be a wash sale. it would be a legit closed transaction.
if he sold it to book a loss and bought right back within 30 days and HELD it it would be a wash sale.
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True, but remember that a wash sale is not the end of the world. A wash sale simply postpones the loss. The loss will serve to adjust the basis of the newly purchased stock, and will therefore be realized when the new stock is sold.

The problem with wash sales is the accounting work involved to report them.

OldTrader
 
I can't believe GainsKeeper charges based on how many trades it imports. And when 1 trade gets broken into 5 orders to fill, it charges it as 5 trades.

What a rip-off for active traders.

Quote from volente_00:

www.gainskeeper.com


It will even adjust for wash sales.
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