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3 Ways to Avoid the Wash Sale Nightmare!

3 Ways To Avoid The Wash Sale Nightmare!

As you approach the end of a tax year paying attention to the Wash Sale Rule is something that will keep you safe; and avoid being a wash sale casualty. The rule was created to prevent “tax loss harvesting”.

A basic wash sale happens when a security is sold at a loss, then repurchased in a short period of time before or after the loss. The IRS has established the wash sale rule in order to prevent anyone from reducing their capital gains by creating wash sales. The most important time of year for day traders to pay attention to is December & January!

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How To Qualify For Day Trader Status

The IRS buckets everyone by default as an “investor” for tax purposes.

In this video we discuss the criteria that needs to be met in order to qualify as an active day trader in the eyes of the IRS.

This is not an application but a set of facts and circumstances that must be met each year to meet the qualification!

B – Business Expenses

E – Equipment Used in Trading

H – Hours Spent in The Market (4+ per day)

A – Average Holding Period Not To Exceed 31 days

V – Volume of Trades (720+)

E – Extent at which you trade (75% of market days)

If you qualify you get TWO main benefits:

a) Business Expense Treatment and

b) The opportunity not “right” to Section 475 M2M

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