IRS Wash Rules
June 18th, 2008
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Question: As a day trader, how can i excempt myself from wash- sale rules, & how can I elect mark to market w/ IRS?
Answer: Yes, you can accomplish both (no wash sale and elect mark-to-market) by making a Section 475(f) election. The election can only be made if you qualify as a trader in securities (many firms use a threshold of a portfolio turnover rate of 4 times per year). For the election, see instructions to IRS Form 4797 at http://www.irs.gov/pub/irs-pdf/i4797.pdf
The downside is that you lose capital gain treatment which probably won’t matter much as long as you don’t normally hold securities longer than one year.
Tax costs for poorly timed stock transactions
Did you sell a loser stock? Before you buy it back, make sure you don’t violate the wash sale rules.
Mysto & Pizzi – Somebody’s Watching Me (GEICO)
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