Wash sale rule and day trading question?

Hi,

I am efiling my taxes and I have some problem to understand the wash sale rule;

I basically day traded in 2009 for 3 months and I ended with a major loss of $7,000;
Now it appears that I even have to pay taxes on aproximately $9,000 of CAPITAL GAIN,

I find it absurd to have lost $7,000 and pay taxes on a 9,000 gain;

I read the IRS article re wash sale and it says a was sale is "the sale of a stock at loss" and the repurchase of the same stock within 30 days to offset the capital loss;

I did not want to offset any loss, I was just day trading and I do not agree to have loss so much money and being not able to deduct these losses;

Can anyone advice on how I can detail this trading loss on my taxes?
Can I write a letter to IRS, ttached to my taxes explaining this problem?

pls advice

thanks

Public Comments

1. The wash sale applies to buying essentially buying the same equity you sold at a loss within 30 days of the sale. Your loss gets added to the cost basis of the stock you bought again. In order to realize the loss, you have to sell it and not buy that same stock again for at least 30 days.

So you need excellent records to tell which stocks you have not owned for at least 30 days, so you could realize the loss on those. If you traded the same stocks or ETF's repeatedly, you may have a bunch of built up losses that you cannot realize yet, until you go without that equity for at least 30 days.

2. Did you *sell* all of your stock by the end of the year or did you keep any?

The wash sale rule says if you sold and rebought the same stock you have to postpone any losses until you sell the replacement stock. if you still own the stock, then yes, you could have a capital gain for tax purposes and a huge *unrealized* loss.

The wash sale rules are NOT a choice, so no letter would get you out of this. If you hate the rule so much, write congress.