Kaye: More on wash sale rule
I looked at your site and I still don't understand. My problem is this.
1) I would like to hold stock for more than 1 year to get capital gains, as I think it will appreciate long term.
2) I would like to swing trade. For example, Buy at 100, sell at 150 (peak), buy back within 5 days after it tanks to 120, hold until it peaks to 200, sell, buy back when it dips at 150, and so on.
How does the IRS then treat this. Do I have to take the short term gain each time? I thought the wash sale applied only to losses. So buying back within 30 days -- does it mean anything?
Also, using FIFO, assume I bought some at 1/3 at 80, 1/3 at 100, and 1/3 at 150, now, to hedge my bets, I sell 1/3 at 150, and then buy back the same number of shares when it falls back to 120. Same thing?
This is a very common trading strategy. But almost no info out there how to handle this.
Scenario #2.
Now assume that it is a loss:
You buy at 150, the stock starts to fall. You sell at 130. Then it tanks to 80. You rebuy within 30 days. The original stock was only held < 1 year, so what is the tax. Loss of 20, and then basis back at 80, with purchase date time of second purchase?
Thanks!
Jonas |
