Trader J's Inner Circle Message Board

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Strategies & Market Trends : Trader J's Inner Circle

NVDA 185.58

+1.8%

Dec 8 3:59 PM EST

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To: Baghul who wrote (97)	11/7/1998 7:31:00 AM
From: kendall harmon	of 56535

There are three different types of persons as far as the IRS is concerned: a trader, an investor, and a dealer. A good rule of thumb for seeking trader status is that you make at least 200 trades a year. If you opt for trader status, you end up on schedule C which means there is no limit to the losses you can take and you can deduct all business related expenses. However, you can end up in a tax bracket as high as 39.6% as you probably know. As for the wash sale rule, let me quote carefully: "The wash sale rule will result in the disallowance of a loss if substantially identical stock or securities are acquired (or a contract to acquire is entered into) within 30 days before or after the sale of the stock or securities at a loss. When the wash sale is applicable, the loss is disallowed, and the basis of the new property is deemed to be increased by the disallowed loss." Note the last sentence and reread it several times--this is the important part where the amount lost is added to the basis of the newly purchased stock.

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