I don't hold my securities for very long. Typically I am buying for a week, selling after a small gain, and buying the same security again after a dip. Usually within a few days of the previous transaction. For example, I have bought and sold MU 4 times in the last 25 days.
I recognize that this trading strategy is dumb, but my question is about my tax liability. My understanding is that the wash sale rule prevents me from claiming losses on dips when selling/buying identical shares within 30 days. I am also under the impression that any gains are still taxable.
Suppose I execute the following trades in order within a 20 day period:
- Buy 1000 shares of $STOCK for $10k
- Sell 1000 shares of $STOCK for $12k (+2000)
- Buy 1000 shares of $STOCK for $11k
- Sell 1000 shares of $STOCK for $7k (-4000)
- Buy 1000 shares of $STOCK for $8k
- Sell 1000 shares of $STOCK for 10k (+2000)
If I cannot claim the losses from this, but am taxed on the gains, does this mean that I have tax liability on $4k of short-term capital gains even though I have netted $0? Am I missing something here?
Submitted April 03, 2018 at 07:09PM by NK_Diplomat https://ift.tt/2EhEKhp
