8 replies to this topic

[Douglas]

The Yale Hirsh, father of The Stock Trader's Almanac, famous foreboding quote might come into play this year if the current trend holds for the next few days.  If the bulls can't drag the market a bit higher in such a strong seasonal period, Yale theorized that the bears might have the upper hand.  Depending on the outcome of the next few days, Yale's old adage might be worth remembering as we ring in the new year.     

 

Regards,

Douglas

[K Wave]

The Yale Hirsh, father of The Stock Trader's Almanac, famous foreboding quote might come into play this year if the current trend holds for the next few days.  If the bulls can't drag the market a bit higher in such a strong seasonal period, Yale theorized that the bears might have the upper hand.  Depending on the outcome of the next few days, Yale's old adage might be worth remembering as we ring in the new year.     

 

Regards,

Douglas

Naz within easy striking distance of fresh bear market low....

[pdx5]

For example You sell stocks before year 2022 ends, and record a loss of $100k.

That saves you $24k in 2022 taxes! Assuming you are in 24% tax bracket.

24% bracket is for $89,076 to $170,050 taxable income (AGI) .

 

Then you can buy the same stock back after January 1st 2023, if you really love the stock.

2022 has recorded 20% loss in SPX. There are lots of folks probably selling to record tax loss.

Edited by pdx5, 28 December 2022 - 05:00 PM.

[Douglas]

pdx5, if you do as you say, you'll need to be careful not to violate the wash sale rule or you'll be in big trouble with the IRS if you claim that loss on your tax return.  You can't claim a loss on your tax return if you buy a stock you sell at a loss within a 61 day window surrounding your loss sale.  You also have to be careful to not have long call or short put transactions for that stock as well during that window.

 

Regards,

Douglas

[pdx5]

pdx5, if you do as you say, you'll need to be careful not to violate the wash sale rule or you'll be in big trouble with the IRS if you claim that loss on your tax return.  You can't claim a loss on your tax return if you buy a stock you sell at a loss within a 61 day window surrounding your loss sale.  You also have to be careful to not have long call or short put transactions for that stock as well during that window.

 

Regards,

Douglas

I thought the wash sale rule was 30 days. May have been extended to 61 days, IDK.

I have not done tax loss selling for decades. But have done it in the past, and I seldom buy back what I sold off.

On another note, IRS computer programs are probably not savvy enough to catch your trade from 2022 matched with your sale in the same stock a few years later. To do that the program would have to search all your past returns and match with the current transactions. It is upto each individual to follow the rules. If IRS audits your return, a sharp agent could discover violation of 61 day rule, however.

 

Also, violating 61 day rule is no where as serious as omitting capital gains or dividends & interest on your return. IRS will just send you a bill for the tax owed plus interest. Very little chance you will be wearing orange suit.

 

I am assuming people who wanted to execute a tax loss sale will not wait until the last day of trading.

Therefore the last 2 days left to trade in 2022 are probably not going to be affected by tax loss selling.

Edited by pdx5, 28 December 2022 - 07:01 PM.

[K Wave]

30 days, has not changed.

 

If you elect trader status, then wash sale not applicable, and you can still get capital gains, as long as you segregate transactions "held for investment".

 

Also, no 3K loss limitation if you have a really really bad bad year, like Kathie Wood....

 

https://www.irs.gov/taxtopics/tc429

[pdx5]

 

 

Also, no 3K loss limitation if you have a really really bad bad year, like Kathie Wood....

 

https://www.irs.gov/taxtopics/tc429

 

LOL poor Kathie Wood! 

 

And that link to IRS publicaiton is very good read if one is a  frequent trader.

 

Note to Douglas: many times one can sell one equity at December end and buy a similar equity in early January.

For example sell GM, buy Ford. Sell one drug company stock, buy another similar drug company. 

Edited by pdx5, 28 December 2022 - 11:26 PM.

[Douglas]

The 61 days is 30 days before and 30 days after the loss sale day.  In other words I don't think that you are allowed to double up a few days before a loss sale if you intend to deduct the loss on your taxes.  And yes as I understand wash sale rules, sell XOM and quickly buy CVX is perfectly OK, but you might get in trouble if you sell SPY and quickly bought Vanguard's VOO if you intend to take the loss on SPY on your tax return since I believe those two ETF's are largely identical.  

 

KWave, as I understand it, in order to call yourself a professional trader, you have to earn a large share of your income from trading and your holding periods have to be consistently relatively short.  You also have to file Schedule C for the trading business side of your income.  As I understand it you can have long term investments which are accounted for on Schedule D, but to call yourself a trader, income generated from that side of your trading would have to be a relatively smaller portion of your total.

 

Tax strategies consume too much of my time since I have to file both US and UK returns each year and they have different tax years, UK being April to April.  What a pain.

 

Regards,

Douglas

[pdx5]

Haha yes Douglas, taxes are a pain, but that pain is better to have over no taxes due.