I am currently buying and selling like this: Buy Stock A Hold for 1 to 20 days Sell Stock A Do nothing for 1-3 days Repeat about 30% of the sales are wash sales - I read that wash sales also adjust the holding period - is there any way to end up with long term capital gains? e.g. by not trading for 31 days after 1 year?
You can avoid the wash sale rule by simply not trading in Dec. The only way to get a long term capital gain is to hold for a year or trade futures and get 60% as long term.
So you're right on 70% of your trades? Congrats. Wash sales only apply to losses. If I recall there were several different ways to adjust the holding period for wash sales, one based on the original date where it just counted total time passed, another where it only counted days while you held a position in the stock. Either way, you won't end up with long term gains unless you keep trading over a year and you're still underwater, then it upticks after the 1 year mark, and you (or more practically your broker) uses whichever wash sale calculation method that counts total time elapsed. Seems like a very small target to me. I wouldn't be inclined to keep trading something if every month I tried and lost money for 11 months, just saying.