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keschard

Frequent wash sale on day trading, tax dilemma

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Good day. I just wanted to ask you guys about my current dilemma. I currently day trade during weekdays and work as a Nurse on weekends. I have been going in and out of same tickers for a few months now, example is MARA and RIOT and some other tickers that I already forgot. My question is this: If i enter a position with MARA, sold it in a few seconds or minutes and incurred a loss, then waited for a good setup in the same trading day to go long again and then sell it again. If i do it that a lot in a single day with the same tickers, will those losses be ever counted since its considered a wash sale? I never hold positions overnight, except for some very rare cases. I am just concerned that my Net Profit in gains would get to be bloated because those losses stemming from the wash sale might not be included. Lets say by Dec 31st i have gained 50K dollars for the whole year by day trading. What I am afraid of is that because of the wash sale that has been happening a lot, my net gains might go higher because of the losses that cannot be used, and Im afraid that I might be slapped with a huge tax bill. I just started trading this year so this is my first time to file taxes with capital gains. If someone can me help me out and shed some light on this issue, please do so. Thank you so much guys. 

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Best bet is to talk to an accountant. However, my understanding of the wash sale rule is this: If you close your position and don't open a new one within 30 days there is no wash sale. Your gains are offset by your losses on each ticker. If the net of all your trades in that ticker is a negative amount then you can not trade that ticker for 30 days if you want to count the loss on your taxes. If you trade it again then you will be subject to the wash sale rules. For example let's say you've traded MARA 30 times this year. If you have $1000 in gains and $800 in losses on those 30 trades then you owe tax on $200. If you had $800 in gains and $1000 in losses you can either not trade MARA for 30 days and take the $200 loss on your taxes or continue to trade MARA and that $200 loss will not count on your 2020 taxes and be accounted for in your 2021 taxes. 

Again I am not an accountant, but I don't think there is a scenario where you would only be taxed on the gains if that's what you're asking. 

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