Actually, two questions: I sold short a stock on December 31st 2002, and bought it back on January 1st, 2003. Do I include the loss or gain in my 2002 tax. I think yes, because the sale was made on December 31, but then let's say that I buy back the stock not on January 1st, but after I file my return, for example on March 30st, 2003. What do I do in this case? The second question is about wash sale. Let's say I bought a stock on June 1st, 2002, and I sold it for a profit on June 10th, 2003. On June 15th, 2002 I bought the same stock again, and sold it for a loss on June 20th, 2002. After that I never touch that stock for at least 31 days. Is the second trade a wash sale, and if yes, is the first trade the one that gets the carryover from the second trade? Thanks for your help!
careful, tax questions are very expensive, what with what "those guys" are charging now a days. see if the local IRS office might help, or their phone line, better yet. download the IRS Publication, read through it until it makes sense.
Rules vary depending on your situation: 1) Are you a Mark-to-Market trader (in which case your position and gain/loss would be marked to the market at 12/31) In order to be a MTM trader you should have filed an election by 4/15 of the tax year in question. 2) Do you use FIFO to account for your trades, or do you use "specific identification"?
I am not MTM, otherwise there is no wash sale rule, and I do use FIFO (which is the default for stocks - I think).