Regarding the wash sale rule and traders, count bugula has read our discussion here and has posted a correction to it on the yhoo board. Altho I do not have his permission to repeat it here, I feel he would wish for me to do so:
<<<"There were some ideas expressed today on SiliconInvestor about trading and wash sales which I'd like to correct. In general, most investors cannot avoid the wash sale. An example of a wash sale is, say you bought 10,000 shares of AXC for 30 cents on April 5, sold them all for 27 cents on April 8 (for a $300 loss), and bought back again at 26 cents on April 20. Ignoring commissions and fees, you could not ordinarily take the $300 loss. However, there is an important exception. If you qualify as a genuine trader--and that does not mean you do a couple of trades a day while you perform your regular job as a software engineer, for example--you can possibly take advantage of the "market-to-market" (MTM) rules, as defined in IRS Code, Section 475(f). This election allows traders to mark their stock holdings as having fair market value at the end of the year. Thus, in effect, all stock held is deemed to have been sold according to the IRS. Though you give up long-term capital gains, you get to avoid two important limitations: (1) the wash sale rules; and (2) the $3,000 loss limitation on net capital losses. The MTM election makes that possible--provided that you can establish that you do, in fact, earn your living as a professional trade, even if self-employed. Have a good weekend, all, and I'll be back with my take on AXC sometime next week, hopefully.">>> |
