3SOF

I look at my broker web page, and I see thousands of dollars of "dissallowed" losses. These are stocks that I have bought and sold many times within this calendar year, but do NOT have a position in at the time.  Can I really not take these losses?

For example, I buy stock A at 10, sell at 11, buy back at 11.20 the next day, and sell at 9 2 days later.  Can I take that loss?

Thx

JB

JB,

You should be able to take the losses!!

Just as long as you buy and sell within the same calendar year. My broker adds up all the shares I buy and comes up with my average price then calculates the average selling price. Assuming you never held a LONG Position(1 year)

Example: if you bought at 10 then sold at 20 but bought back again at 20 and it slid back to 10. You have to be able to claim the one and the other.

Brad

i THINK THE WASH RULE SAYS THAT IF YOU SELL A STOCK FOR A LOSS AND THEN BUY IT BACK WITHIN 1 MONTH, THAT LOSS IS NOT ALLOWED FOR TAX PURPOSES.

Sorry for the caps, too lazy to change it now.

Yes if you take a loss then you cannot buy back the stock until after 30 days have past or you cannot take the loss. Like wise if you sold a stock for a gain then bought it back within 30 days and later want to sell it for a loss you cannot use that loss. So just remember that as you trade and if you really want to take a loss just forget that stock until 31 days.

The way around this is if you trade for a living you can file with the IRS for Mark-to-Market accounting and then you just ignore the wash sale rule and on the last day of the year you treat all open positions as sold and then all cost basis on Jan 1 become the closing price form Dec 31.

You have to file the request for this status by April of one year to start using it on the following year. I use that method so can sell a stock for a loss and buy it back a moment later.

Thanks for the replies, looks like I am screwing myself here buying back the same stocks.  Over $1000 so far that I cannot claim and just threw away forever   It makes no sense that little investors have to be a victim of this rule, wasnt this set up originally for big corporations?

JB

I dont think thats the case jb  in fact I'm pretty sure its not as long as it is your main source of income, especially if its your only source.  You need to pick up this book: 

The New Trader's Tax Solution
http://www.amazon.com/exec/obidos/tg/detail/-/0471209996/qid=1121870547/sr=8-2/ref=sr_8_xs_ap_i2_xgl14/104-8266387-2096707?v=glance&s=books&n=507846

Its called trader status..and its considered your own business and your losses are all counted against your gains since its your biz...and amazing how much you can deduct 

I am not well versed in it but research this stuff, its great...well as much as taxes can be great  (not much)

You can understand the reason for the rule. If you could use the loss and buy the stock right back there would be no gains.  Example - you buy CAFEW today at $9.70 at open and it drops to $8 so you take a $1.70 loss then buy it back at 8 and sell at 11 for a $3 gain minus the 1.70 loss - no way - not allowed of course.

The reason a mark-to-market trader does not use the wash sale rule as they do not tale losses in exactly the same way - they use all gains minu all lossed

this looks pretty good:

http://www.tradingacademy.net/Merchant2/merchant.mvc?Screen=PROD&Store_Code=OTAS&Product_Code=CD17-TAX&affil=google

but you should check with a pro