I am considering trading an account for a relative via an IB "Friends and Family" account. I am fully automated day trading over a universe of about 2500 stocks. The problem is the "Wash Sales Rule". Is there anything they can do to avoid it? They work full time. Thanks
As you may realize, a way to get out of the wash sales rule is to elect M2M for an active trader. And a passive friend/family member with his own linked sub-account does not qualify for IRS purposes as an active trader... no matter how many trades are run through the friend's account. Therefore consider... form a separate tax entity where all parties receive a K-1 after electing M2M at the entity level.
+1 the trading holiday. On thanksgiving weekend you could make a list of all positions you touched within the past month and make those offlimits to touch in December (IB even lets you set up prohibited symbols per account, I think. with 2500 in your universe you're sure to still have many to trade so not even really a holiday. Of course if you have positions on as of Thanksgiving that you don't want to close (and are negative) you'll have some choices to make...