Another usefull lionk on Mark-To-Market accounting. Fromwhat I have read so far, you have to declare it prior to 4/16/20** of the tax year for which it applies - in other words it is too late to elect it for this tax yr 2010. http://www.traderstatus.com/mark2mkt-features.htm For anyone who trades different assets, do you lose 60/40 treatment on futures and forex if you elect M2M to handle those pesky wash sale stock restrictions? fishtrader - you definitely need an accountant who deals with traders needs as opposed to a generic accountant. Tqax law is so complicated that you can be led astray by someone who doesn't know the tax code well. Green is one alternative, but there are many others too depending on where you are located.
Simple rules of thumb... 1. If you have losses which could potentially be disallowed due to wash sale rules, just don't trade any stocks for the last 30 days of the year. 2. As long as your final trade of the year in that stock is a winner (even if only for $.01), wash sale losses are negated... as you get to add your losses from prior trades to the cost basis of future trades. Also... let's say you've got a big string of losers and are concerned about wash sale rules not allowing you to take the losses for this tax year..... and it's December. So long as you have ONE trade in December... say, Dec. 15, which is a winner... and the size of the trade is enough account for all of your wash sale losses, all of the losses before that trade will be allowed for this year. If you go back to a big string of losses again, the only wash sale losses you need to be concerned about are the ones which occurred after Dec 15. The concept of Wash Sale is stupid, arcane, cumbersome and costly to comply with. For nearly everybody, they even have virtually no impact on your yet worth... they might, however, impact gains/losses and the taxes thereon by one tax year. A lot of inconvenience for some for no overall consequence. The Wash Sale laws should be repealed.
You can declare M2M just for securities trading to avoid this problem. From: http://www.greencompany.com/EducationCenter/GTTRecTaxTreatmentTraders.shtml it says:
Of course, always that. But Wash Sale disallowances don't provide more tax revenue... at best they merely shift the tax from one year to the next.
dunno about other brokers,but if you are with IB-they will calculate those wash sales for you. it will be on your tax forms.you can do it yourself,there a couple software apps for that(not cheap). i don't trade like you do,but last year wash sale cost me couple extra grands in taxes..still-'m not planning to elect MTM and trader status(even if i'm perfect candidate for it) mainly due to a: more tax work,job must be done by pro,who specialize on it(and they cost A LOT), b:-complications to remove this status,once you done with trading.
yeah..this wash sale rule should abolished long time ago..just another piece of food for leeches like IRS,tax lawyers and accountants..
if at the end of the year all of your trades combined in bac are profitable the wash sale will have no effect on your income or tax due. wash sales rules are only concerned with shifting losses. the paperwork can be a pia though and i agree it should be abolished.
Still confused. Ok lets make it plain and simple. Let's say for the whole year of 2010. I trade BAC for hundreds of trades, I made money on my wins = $100,000. I lose money on my loses = $40,000. So I finally made a profit = $60,000. (forget about the commissions) So do I pay tax based on the $100,000 that i win (wash sale rule)? Or do I pay tax on my profit $60,000??? Just make it simple. forget about the forms and and all the complicate stuff. Does the wash sale apply to me? If it doesn't then why have the MTM for? Why should I care about it? But if the wash sale rule applies to me, then this whole thing is absurd. Because I wasn't qualified for the MTM for 2010. Plz advice......