Greetings everyone. I've been trading like a madman with an obsessive / cumpulsive disorder for the last several months... two Roth IRAs, two rollover standard IRAs, and a standard brokerage account... I trade stocks and options. no futures, comodities, bonds, children or small pets. All with E*Trade. I have 450 - 500 transactions during this time and anticipate 2-3 times that by the end of the year. When I found out about wash sale rules applied across ALL accounts, dispair loomed on the horizon. Tracking that mess in the activity across five account sounds like no fun .... unless you are a massochist, which thankfully I am not. I understand there is software available like TradeLog and a few others but I'm not seeing any recent reviews, complaints, comparisons, etc. Can anyone point an old hold-em-till-you-fold-em investor who has discovered this new active trading hobby/compulsion?
If you are trading price action, then use micro-futures, which allow flexible bet sizing and avoid the wash sale problem.
The simplest way to avoid wash sales is to stop trading on December 1 until the new year begins. At that point, you can just net the gains and losses for the securities you traded all year long. The key is to stop... you don't want to add a different symbol to wash during this period. Another easy thing, as someone mentioned... trade a completely different instrument such as futures. Or forex, or bonds, or crypto, or metals, whatever. Futures btw, have a tax-advantaged status... 60% long-term 40% short term, no matter the holding period. 1 minute or 1 year makes no difference, they are taxed at the 60/40 rate. Happy trading.
Thanks for the input guys. I am reluctant to delve into trading platforms that I am not familiar with. I'm currently up over $450k in all five accounts for the year with well over $100k realized capital gains in my one trading account. I come from the "if it ain't broke, don't fix it" camp so hopefully you can understand my reluctance to delve into deep water I am not familiar with. The "pause trading" option is the most attractive so far... sell any positions at a loss before year end and wait till the end of january to start trading those tickers again. It would be very helpful to know my wash sale risk should I see an irresistable opportunity during the "blackout" period,
why do you need to care about wash sale rules for roth ira and standard ira? unlike a regular tax trading account, if you lost money on a trade, you can't do any tax deduction on ira account. and you won't be tax until you take out the money when you over 59.5.
update: i just google and wash sale doesn't apply to ira account. thats go for both roth and regular ira. the op is misinformed.
Because trades in any accounts I or family member's accounts can trigger a wash sale in the taxable account. That's what causes the nightmare.
for the op: ok, let say you bought and sold ba and lost $1000 on a trade for an ira account on 5/1/20. on 5/2/20, you bought ba on a taxable account and then made a profit of $2000 on 5/5/20. that would trigger a wash sale on your taxable account? if yes, i got simple answer for you. don't trade the same shit on both your ira and regular tax account.
You are correct that a wash sale does not apply to an IRA, BUT, trades made in your or your spouses IRA can trigger a wash sale in any of your normal trading accounts. In some circumstances, the loss is not carried forward but lost permanently. From the IRS instructions for Schedule D: Wash Sales A wash sale occurs when you sell or otherwise dispose of stock or securities (including a contract or option to acquire or sell stock or securities) at a loss and, within 30 days before or after the sale or disposition, you: 1. Buy substantially identical stock or securities, 2. Acquire substantially identical stock or securities in a fully taxable trade, 3. Enter into a contract or option to acquire substantially identical stock or securities, or 4. Acquire substantially identical stock or securities for your individual retirement arrangement (IRA) or Roth IRA. You can't deduct losses from wash sales unless the loss was incurred in the D-5 ordinary course of your business as a dealer in stock or securities. The basis of the substantially identical property (or contract or option to acquire such property) is its cost increased by the disallowed loss (except in the case of (4) above). These wash sale rules don't apply to a redemption of shares in a floating-NAV (net asset value) money market fund. If you received a Form 1099-B (or substitute statement), box 1g of that form generally will show whether there was any nondeductible wash sale loss and its amount if: • The stock or securities sold were covered securities (defined in the instructions for Form 8949, column (e)), and • The substantially identical stock or securities you bought had the same CUSIP number as the stock or securities you sold and were bought in the same account as the stock or securities you sold. (CUSIP numbers are security identification numbers.) However, you can't deduct a loss from a wash sale even if it isn't reported on Form 1099-B (or substitute statement). For more details on wash sales, see Pub. 550. Report a wash sale transaction in Part I or Part II (depending on how long you owned the stock or securities) of Form 8949 with the appropriate box checked. Complete all columns. Enter “W” in column (f). Enter as a positive number in column (g) the amount of the loss not allowed. See the instructions for Form 8949, columns (f), (g), and (h).
For a clearer presentation: https://www.investopedia.com/terms/...xt=The rule defines a wash,or option to do so.