How do frequent traders deal w/ record keeping for the end of year tax consequences of the wash sale. Thanks
My guess is that most frequent traders that don't belong to an LLC use marked-to-market accounting so the wash sale rule would not apply. you can find more info here: http://www.fairmark.com/capgain/wstrader.htm or http://www.taxtrader.com/ or just do your own web search. If you have not already filed for traders status then you just need to keep track of every stock you sold in December and make sure you don't by it back within 30 days. BTW, most traders that I know don't list every trade on their sch. D and they always use short term capital gains. If you have a ton of trades I don't think the IRS wants to see every trade... just so long as the totals match your 1099s. If the IRS ever wants the detailed info they know where to find you. Oh... and if you do trade through a LLC... the LLC usually declares Marked-to-Market accounting so you don't have to. Then you just get a simple K1 at the end of the year... very nice! Fletch P.S. I'm not a CPA so do your own research.
From what I understand, if you daytrade a stock in December, you may not trade it again for 30 days to avoid the wash sale. This rule has always seemed senseless and confusing to me. So if a person daytrades just ten active stocks like QQQ, JNPR, INTC,MSFT in December, then that person can't trade them again for thirty days. I don't get it. If this is true, then can I draw the conclusion if you just trade a handful of stocks, sometime between December 2001 and January 2002, your not going to do a damn thing except trade stocks you've never traded before. What fun! What probably happens is that many traders ignore this rule and continue to trade the way they like, and just hope that never get audited by the IRS. And getting audited is probably a 3 in 100 chance. All you do gooders out there who follow the law and this rule....You lose!!