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Re: Wash Sale Rules



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I've read a bunch of this stuff several times and it's not sticking very
well (taxes are boring) but I have the distinct impression that there is a
significant gotcha in electing Mark to Market with the sole advantage being
the elimination of the $3000 limitation on writing off net trading losses in
a single year. Thanks for the greencompany URL, I'd lost that one and I
wanted to obtain the small guide they have - small might stick better.

Earl

-----Original Message-----
From: Levent Erbora <erbora@xxxxxxxxxxxxx>
To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
Date: Tuesday, February 23, 1999 12:47 AM
Subject: RE: Wash Sale Rules


>This year, I am going to file under the new "Trader in Securities" status
with the "mark-to-market" option. When you do that, wash sale rule does not
apply at all. It becomes very similar to the way the commodity trades are
reported. The catch is, you have to be able to qualify as a bona-fide trader
under somewhat strict IRS guidelines. This is all very new, and it seems
like there is a lot of misinformation out there and any good/reliable
guidance is very hard to come by. The best info/resource I could find was at
>
> http://www.greencompany.com/
>
>I have not purchased any of their guides or services yet but am strongly
considering it. I would also appreciate any feedback about them or any other
source on this Trader Tax matter.
>
>Hope this helps.
>
>Regards,
>
>Levent Erbora
>
>-----Original Message-----
>From: Dan [SMTP:buchach@xxxxxxxxxx]
>Sent: Monday, February 22, 1999 10:54 PM
>To: RealTraders Discussion Group
>Subject: Re: Wash Sale Rules
>
>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.
>
>