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Strategies & Market Trends : IRS, Tax related strategies--Traders -- Ignore unavailable to you. Want to Upgrade?

To: RookieTrader who wrote (447)	8/19/1998 8:59:00 AM
From: Gorak Shep	Read Replies (1) \| Respond to of 1383

One sneaky thing you could do is...after you have sold for a loss to put on your taxes you could then re buy the same position and then sell at a small gain and that would take away the effect of the WASH Sale and then you would just re buy again to go for the long haul and since your last trade was a gain you would not have to worry about the WASH sale rule! Sneaky but wrong! You take the loss from the wash sale and add it to the cost basis of your next buy. So you won't have a gain in that second buy until you recover the entire loss. Say you lost $5000 in your first trade and then "made" $500 in the second trade not considering the $5000 wash carry forward. Then your second trade is actually considered a loss of $4500 and if you buy back a third time within the next 30 days, your second trade will also be a wash sale and the $4500 must be added to the cost basis of your third trade. Hey, it is tough to be sneaky enough. The IRS rules cover this sneaky plan.