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IRS Wash Sales Rule


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IRS Wash Sales Rule

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  #1 (permalink)
Bala, PA, USA
 
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Any of you who day/swing trade stocks/ETF's probably have the headaches of the IRS wash sales rule, which says
you cannot deduct losses for any stock you bought, sold and bought again within 30 days. Not to
mention that wash sales reporting is a huge pain in the rear on your tax forms.

A simple solution is to trade a different instrument in the last 30 days of the year, that you did not trade
within the previous 30 days. So, for instance, if you traded SPY, and DIA and QQQQ thru out the year,
then in December, stop trading those, and for instance, trade the IWM instead for the last month of
the year. That will negate all wash sales for SPY, DIA, and QQQQ because you will not have re-bought
these in 30 days. Then, in January, you can start trading whatever you like again.

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  #2 (permalink)
the coin hunter
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it apply to within 30 days any time, not just within 30 days at the end of the year

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Bala, PA, USA
 
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cory View Post
it apply to within 30 days any time, not just within 30 days at the end of the year

True, I just use the December rule, so I don't have to keep track of what I trade during the entire year.

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The best way to beat this is to claim mark to market trader status with your return before April 15th. It won't be useful till after the following January however.

Dan

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Bala, PA, USA
 
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eDanny View Post
The best way to beat this is to claim mark to market trader status with your return before April 15th. It won't be useful till after the following January however.

Dan

I would advise anyone to check with an accountant before claiming mark to market status. I understand their some intricate complications. I think you can never change that status back in the future, and several other consequences.

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Last Updated on December 4, 2010


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