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Non-Tech : Paired Trades and Hedging Strategies
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To: TimF who wrote (76)1/14/2005 11:47:47 PM
From: Ira Player  Read Replies (1) of 136
 
The wash sale rule was introduced to stop investors from selling loosing positions in order to deduct the loss and then immediately buy replacement shares to maintain the position.

There are many places in the tax code where the IRS is a diode...gains are always now, but losses may be deferred.

Limiting the deduction of capital losses against earned income is one case that is extremely unfair, in my opinion. Originally aimed at the high income abusers, the limit now does not allow many in the middle class to recover their investment capital.

I have spoken to several people that paid significant amounts in taxes on stock market gains during the 90's only to lose much of this capital during the last few years. Unable to deduct these losses against earned income and with little capital to invest relative to the loss carry forwards, some will not recover them all in the next decade.

Ira
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