Argh, I'm no accountant but it seems to me the wash sale stuff is fairly straight forward - Meant to close a loophole whereby one could close a position to realize tax loss and immediately thereafter reopen the position. So if I am an active trader in security XYZ in 2013, and have no open position said security at close of business 12/31/13, there is no wash sale generated during 2013 on XYZ, just a series of P&L's from round turn transactions... It seems to me this should be correct. Yet my brokers are reporting all sorts of wash sales dissalowances, why? For Example, trading takes place in security XYZ in mid November 2013 after which position is closed, and trading does not take place again in XYZ until Mid February 2014; roughly 3 months later. Broker reports a wash sale in XYZ resulting from the Nov 2013 trading. From what I can tell wrt/ wash sale rules, there is a time window of 31 days in which trading would have to happen to create a wash sale, and a position would have to be open going into 2014, or during January 2014. But here I have a wash sale resulting form a round trip in mid Nov 13, followed by a round trip in mid Feb 14. There is absolutely no way that this trading can result in avoiding taxes, since it results in P/L in '13, & P/L in '14. Am I wrong or is my broker wrong? Interested to hear back from anybody knowledgeable in the matter.
Thanks for asking this question! A very very good one! I'm siting back with a mint julip waiting for the answers. God bless the the U.S. Congress and god help the IRS who must do their bidding. God bless America!