Robinhood daytrader owes 800K to IRS on a profit of 45K

terr · Mar 30, 2021

.. because he was ignorant of wash sale rules. I wonder - will the IRS take pity on the guy?

https://notthebee.com/article/robin...fhmVyz4R8V9AlCajNUPnbMcAn81MSWxeY9AdXk8NMtNSA

fan27 · Mar 30, 2021

terr said:
.. because he was ignorant of wash sale rules. I wonder - will the IRS take pity on the guy?

https://notthebee.com/article/robin...fhmVyz4R8V9AlCajNUPnbMcAn81MSWxeY9AdXk8NMtNSA

Perhaps he can claim trader tax status.

terr · Mar 30, 2021

fan27 said:
Perhaps he can claim trader tax status.

I am pretty sure that can't declare it post factum. Maybe I am wrong.

guru · Mar 30, 2021

fan27 said:
Perhaps he can claim trader tax status.

It’s too late, you can’t claim it for past years.

newwurldmn · Mar 30, 2021

Unless he traded 1256 contracts, he’s hosed. He has 800k of losses he can take 3k at a time.

terr · Mar 30, 2021

Would be interesting if the IRS didn't budge and this was taken to court...

The unfairness of trying to get 800K in taxes out of someone who earned 45K is so blatant that maybe the court would set some kind of precedent invalidating the wash rule, within certain limits.

newwurldmn · Mar 30, 2021

terr said:
Would be interesting if the IRS didn't budge and this was taken to court...

The unfairness of trying to get 800K in taxes out of someone who earned 45K is so blatant that maybe the court would set some kind of precedent invalidating the wash rule, within certain limits.

this isn’t the first time this has happened.

and ignorance isn’t an excuse

SteveM · Mar 30, 2021

Worth a read:

https://greentradertax.com/how-to-avoid-taxes-on-wash-sale-losses/

athlonmank8 · Mar 31, 2021

newwurldmn said:
Unless he traded 1256 contracts, he’s hosed. He has 800k of losses he can take 3k at a time.

How would the 1256 contracts help him? There's no wash sale on only those contracts. Unless im wrong here. Im assuming he was only trading stocks.

gkishot · Mar 31, 2021

terr said:
.. because he was ignorant of wash sale rules. I wonder - will the IRS take pity on the guy?

https://notthebee.com/article/robin...fhmVyz4R8V9AlCajNUPnbMcAn81MSWxeY9AdXk8NMtNSA

There is something wrong with this article. According to this article a day trader can never deduct a loss if he/she trades the same stock all the time. If this is the case there should be much more people suffering from the wash sales rule than just one guy.