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Strategies & Market Trends : Income Taxes and Record Keeping ( tax ) -- Ignore unavailable to you. Want to Upgrade?

To: Colin Cody who wrote (2195)	5/11/1999 12:30:00 PM
From: Richard Joslin	Respond to of 5810

Colin makes excellent points re trader audits. One add'l comment- Since trader status gives rise to favorable tax results, you may find that a qualified CPA/attorney/enrolled agent with numerous trader clients will find it in his/her best interest to represent you (perhaps even at at a reduced rate) since a unfavorable (pro-IRS) outcome may indicate to the IRS a need to expand its audit net to an area where they may perceive abuse or unmerited claims for trader benefits. And since trader status is not defined by statute but rather through judicial interpretation, it may be prudent to have a professional present the best argument in support of your trader status claim. Recent cases (e.g. Mayer) have indicated that the IRS is refining its interpretation of trader case law. Given the recent publicity toward day-trading, it may be that the IRS position towards traders is narrowing and that kaz's audit is a reflection of this change. Or it may simply be because the 1099-B proceeds did not indicate give rise to capital gains on Sch D, creating a computerized audit flag. Needless to say, a properly completed and accurately presented return based on adequate recordkeeping is invaluable in times of scrutiny. And this goes for state returns as well.

To: Colin Cody who wrote (2195)	5/13/1999 12:33:00 AM
From: john rieck	Read Replies (2) \| Respond to of 5810

Question on wash sale rule: say I buy AMZN on 5/5/99 @ 140. on 5/6/99 I sell @ 138. I buy it back on 5/7 @ 142. then later that day it crashes and I sell (100 shares on all trades) @ 110. Now, can I use my big loss (142>>110) and elect NOT to bother with the tiny loss (140>>138) for tax purpses? Or does the wash-sale rule demand that I use the tiny loss, which would mean that I cannot use the big loss as a ST Capital Loss?