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Thanks for your explanation - what this appears to me to mean is that if one
daytrades stocks, or even trades in and out every few days, one could not
simply net out all profitable trades and all losing trades at the end of the
year and pay taxes only on the net gain or loss like you can with futures- the
short term stock trade losses would be not be able to be used if the same
stocks was repurchased within thirty days. This would greatly increase the tax
bill - am I interpreting this correctly? Seems like this would make it
impossible tax-wise for daytraders.
Are any of you stock daytraders out there dealing with this situation?
Thanks, Dan
Richard wrote:
> >Could someone please help exactly what the IRS "wash sale" rule means,
> >and the tax impact to a stock day trader that goes in and out
> >frequently?
> >
> >Thanks in advance, Dan
>
> It means that if you want to take a loss on a stock for tax purposes, you
> cannot purchase that same security in "like and kind" for at least 30 days.
> This is to prevent people from getting a deduction without parting with the
> stock for at least awhile.
>
> Could have impact for day trading. If you claim a loss for a transaction
> and you repurchased the stock within 30 days, that loss could be disallowed
> under the wash sale rule. In that case, for tax purposes, your capital gain
> or loss will be treated differently.
>
> The IRS site has details.
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