The "Wash Loss" tax rule has screwed me?


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  • cobra89
  • 24-Apr-2012 at 6:08 PM
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  • Posts: 1
In 2010 I traded around 1,000 stocks, I was trying out day trading. At the end of the year I actually LOST $200. When I received my Schedule D from the company I trade though it said I made a capital gain of $18,000!!! Then I found out about the "wash loss" rule. That's insane for the government to claim that I owe taxes on $18,000 in capital gains when in reality I lost money. So, basically I'm paying the government money that I never made. That doesn't make sense and I'm trying to find a resolution/more insight on this matter. Any help? Suggestions?

Thanks in advance.
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  • beyondMP
  • 25-Apr-2012 at 8:59 AM
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I haven't day traded stocks in years, but when I did there was a way around this. As I recall, it had something to do with making an election as a "Trader" and using "mark to market" election(I might be wrong on this). Again this was a long time ago, laws might have changed. BEST ADVICE-Find an accountant that knows about trading tax laws. There are a few on the "net" but make sure they have experience in that area.

By the way, I recall my accountant charged me a lot of money because he had to do a report showing the "matchups" of all trades. It was about 40-50 pages long.
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  • kbi
  • 26-Apr-2012 at 8:41 AM
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Does this rule apply to Forex daytrading???
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  • taterblue
  • 27-Apr-2012 at 9:09 PM
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  • Posts: 2
In 2010 I traded around 1,000 stocks, I was trying out day trading. At the end of the year I actually LOST $200. When I received my Schedule D from the company I trade though it said I made a capital gain of $18,000!!! Then I found out about the "wash loss" rule. That's insane for the government to claim that I owe taxes on $18,000 in capital gains when in reality I lost money. So, basically I'm paying the government money that I never made. That doesn't make sense and I'm trying to find a resolution/more insight on this matter. Any help? Suggestions?

Here is some basic info. Hope it helps.

http://www.traderstatus.com/default.htm
http://www.smartmoney.com/taxes/income/taxes-on-day-trading-9531/
http://www.law.cornell.edu/uscode/text/26/1256


taterblue
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  • taterblue
  • 27-Apr-2012 at 9:13 PM
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  • Posts: 2
Does this rule apply to Forex daytrading???

As far as I know it does not pertain to futures or forex.


taterblue
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