Hello fellow traders, new member here. I just wanted to confirm with the veterans here about the wash sale rule. Let's say I day trade the same ticker all year. If I close out the position at the end of November, and not trade it at all in December, that will allow me to realize all the losses during the year for that stock, correct? Thanks in advance. Choofchoof
In your example, the answer is yes, you would be able to take all of the accumulated losses. But it has nothing do with "not trading in December." Wash sales are not based on the months of the calendar. They are based on periods of 30 days. So, for example: I buy the stock on December 2, and then sell it on December 4 at a loss. Then I buy it back on December 9. If I am holding the stock at the end of the calendar year, then the loss that occurred on December 4 is a wash sale, and I don't get to claim that loss for that calendar year. It gets added to the basis of the shares that I bought on on December 9. This is because I sold it and bought it again in less than 30 days. However, in this same example, if I then sell the stock on December 13--regardless of whether it is sold at a gain or loss--and I do not buy it again until after January 13--then I will be able to use the loss that occurred when I sold it on December 4. As noted earlier, the loss that occurred on December 9 gets included in the basis of the shares I bought on December 9. So when I sell the stock on December 13, I get to use that loss, as long as I don't buy it again for at least 30 days. BMK
Have you ever thought about why the trading reports are not available in January for IRS? That is because of the wash sale. As someone else also pointed out that is based on 30 days and not the calendar year. If you trade December 5 and then do not trade till say Jan 6th, then you won't have a wash sale, but if you trade in a 3rd, it is considered wash sale.