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Microcap & Penny Stocks : Trading 101 -- Ignore unavailable to you. Want to Upgrade?

To: Ga Bard who wrote (384)	11/2/1999 5:27:00 PM
From: herry iball	Read Replies (1) \| Respond to of 406

GB: On wash sales. Ok, it's considered a wash sale if you sell at a loss and buy back within 30 days. But what happens if you average down? for example: you buy 100 shares of ACK for 1$. The price drops to 50 cents, and you add another 100 shares to average down. Keeping it simple for arguments sake..... 1. The stock goes to 99 cents, and you sell 100 shares. Since the FIFO rule applies, you have then sold the first 100 shares you bought, and since there was a loss involved you then shouldn't buy anymore for 30 days, and if you do, then the losses cannot be counted towards this year's taxes, but have to carried over to the next year. This is correct? 2. The stock goes to 99 cents, and you sell all 200 shares. The total sell was still for a loss overall, is this considered a wash sale since the first block still lost money? 3. The stock drops to 50 cents....If one wants to take advantage (ie write off) of a drop in price, but still believes in the stock, rather than selling the first 100 shares and then buying back the 100 shares immediately (wash sale), could you buy an additional 100 shares at the lower price, and THEN sell the original 100 shares without it being considered a wash sale (you bought prior to selling the original 100). This again assumes that Mr. IRS Man follows the FIFO rule. Also, It's not a wash sale if one is considered a professional trader. I've been looking but cannot find a strict definition of the term. Is there any place that you know of where I can get a definitive line drawn or is it based on the whims and fancies of the chap who ends up auditing you? Thanks. Vlad