Stock Trading and Other Things

Day trading and Wash sale rule: if I buy and sell the same stock on the same day, does the wash rule apply?

Hi,

I am efiling my taxes and I am confused when to claim my losses under wash rule or not;

Many times I bought in 2009 blocks of shares the same day without thinking of a REPLACEMENT of the previous block of shares:
under this rule the IRS seems to tax all the profits but ignoring the losses that a day trader occured by purchasing different blocks of shares of the same stock;

Can someone tell me when I have to consider the purchase of a block of shares a replacement?

pls advice

thanks

Public Comments

1. If you buy replacement shares (2nd block) within 30 days before after a sale, any loss is postponed to the 2nd block of shares.

2. If you buy "essentially the same equity" within 30 days of a sale of that equity, any loss is postponed until you sell it at an overall profit since you first bought it, or do not own it for at least 30 days. Until then your previous loss is effectively added to your next purchase price as its basis.

It does not matter if you consider purchase of shares a replacement. If you sell at a loss and and buy the same stock within 30 days, the lesser of the number of shares you sold or bought is considered a wash sale and the loss on that number of shares is deferred.

3. A wash sale occurs when you sell or trade stock or securities at a loss and within 30 days before or after the sale you:
*Buy substantially identical stock or securities, or
*Acquire a contract or option to buy substantially identical stock or securities.
If your loss was disallowed because of the wash sale rules, add the disallowed loss to the cost of the new stock or securities. The result is your basis in the new stock or securities. This adjustment postpones the loss deduction until the disposition of the new stock or securities.

If you sell a stock at loss and do not buy the same stock within 30 days, wash rule does not apply that is you can claim the loss.