3 Ways to Avoid the Wash Sale Nightmare!

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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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For Related Videos on Day Trader Taxes:
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✅Why Active Day Traders Should Elect Mark-To-Market
• Wash Sales Suck! Why A...
✅ Day Trader Taxes | Strategies and Debunking The Top 3 Tax Myths!
• Day Trader Taxes | Str...
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DISCLAIMER: I am not a financial adviser but fortunately I am a CPA :). These videos are for educational and entertainment purposes only and should not be taken as "individualized" tax advice. Should you need tax solutions I highly recommend consulting with a professional or our CPA Firm. Investing of any kind involves risk. While it is possible to minimize risk, your investments are solely your responsibility. It is imperative that you conduct your own research. I am merely sharing my opinion with no guarantee of gains or losses on investments.
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Опубликовано:

21 ноя 2020

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Комментарии : 401

@menglin4544 3 года назад

To clear things up, he makes it way harder to understand about wash sale losses. If you trade and have alots of wash sales throughout the year. Don't worry. Just closed out all of the position by december 31 and don't trade any stocks that you have wash sale losses in december for 31 days. Basically closed out all of your positions by december 31, and dont trade it in january then all of your wash sale losses from december/ attached wash sale losses from prior months will be wash away in the current year.

@mitpatel6452 3 года назад

Thanks man. I am Newbie to wash sale. For year 2020 Now I have Disallowed wash sale amount around 18K. And net gain/loss is Negative 28K. I know I can’t claim that losses this year. I just knew about wash sale and I may have couple more losses and buy back in 2021 so far. So for year 2021 can I claim losses for 2020’s 18K ? And how to avoid current year’s transaction not to count as wash sale ? Please explain. I may have ask wrong way Please co-operate.

@menglin4544 3 года назад

@@mitpatel6452 well, your wash sale losses disallowed+ your net loss is your taxable amount. So, for your cases, -28K+ 18K= -10K is your final losses. You have no gain in 2020. If you have a huge wash sale losses in $XYZ stock in december or prior months if you dont break 31 chain(wash sale rule), then just dont trade that ticker in the month of January. Then all of your wash sale losses from the current year would be wash away in the current year.

@TR-nj5dh 2 года назад

@@menglin4544 So lets say your wash sale losses disallowed is 50k and your net short term capital gains on the year is negative 10k. You then have to pay taxes on 40k(-10k+50k) next year, even though you lost money on the year?

@menglin4544 2 года назад

@@TR-nj5dh (proceeds sale + Wash sale loss disallowed)- cost basis= your net gain. It should be on your 1099-B form from your broker. You must add proceeds and wash sale loss disallowed and then subtract with the cost basis in order to get actual net gain.

@adamnaughty 2 года назад

We need people like you .You empower us sometimes people who talks too much confuse people lol . I have teacher that explains the most hard problems but he made it so easy to understand that even dumb person feels smart and again thank you . You should do a video channek

@ronfoulkes7523 2 года назад

Huge help. Thank you!!

@joelarc7635 2 года назад

Thanks for the information Brian!

@ashishm8850 2 года назад

Thank you! This was immensely helpful.

@lukesottos 4 месяца назад

Perfect framing of the situation at the beginning of ur vid. Thats exactly how i found this vid. Going down the rabbit hole. Glad i found ur channel, so professional and clearly explained.

@jodypro2535 3 года назад

Thanks for the knowledge

@fx-retracer 3 года назад

Thanks so much. This was very helpful and verified everything I read elsewhere.

@teymurayyubov9457 Год назад

Thank you for explaining it!

@jonwestbay3739 3 года назад

Awesome content Brian. Thank you

@maizeandbluetwo3107 2 года назад

Excellent video brian! Answered all the questions i was looking for.

@Bbc95978 3 года назад

Brian you are the best! Thank you so much for sharing all this knowledge about wash sales. You have my 👍 in all your videos. Keep the great work so we can keep learning from your experience. The best of luck for you my friend!

@angelitojusay593 3 года назад

You explained this very well. Thank you!

@onomas_ 3 года назад

Excellent info! This vid should have 1,000,000 views! Keep ‘em coming!

@Potato-mu7nu 3 года назад

Thank you!

@kennytnt06 2 года назад

thx u buddy, i did learned something for this video, thx for your time

@yt-nu4tm 3 года назад

Very good. Thank you

@absolutebosscollective8202 2 года назад

Thank You Bro!

@Evangelionification 11 месяцев назад

Thanks Brian! You’re the only one I’ve found answer my concern! ❤❤❤

@ourfamily5954 2 года назад

Thanks for the video, Brian. This rule can be very confusing. I appreciate the simple steps to avoid it. It was the perfect time to watch it, with December around the corner.

@ColbsterzSnowboarder 3 года назад

Bro I appreciate you. Nothing on the internet is clear on this and you've just confirmed my assumption on how to file this on taxes. MUCH APPRECIATED!

@owenhill1998 Год назад

I rarely sub to youtube channels, but you earned it with a very well explained video. This should be at the top of the list as recommend to the average individual!

@rayvargas9383 3 года назад

very helpful thank you very much

@trevorisle5462 3 года назад

Great vid. Clearly explained. Thanks!

@mcthomps 2 года назад

thank you!

@XMan-ub8zf 3 года назад

Thanks Bud

@sunnysun8877 4 месяца назад

Very knowledgeable, thank you so much.

@Thoithe1 3 года назад

Definitely great info focusing on the year end tax.

@FiinTrading Год назад

Great channel and video man. I subbed.

@chuckesavage8383 2 года назад

Brian's videos and tax services are A1!!

@Master_djchops-sse 9 месяцев назад

Thank you. I was sale alot unfortionatly with a day/swing trade but this help me understand what was what.

@crystiancepeda9029 3 года назад

I would love to visuals with an example man. I love your videos!

@askabout4213 3 года назад

You deserve more likes. Thanks for explaining this very important rule of investing. On a different topic, do you know if and when capital loss can be reported if a company restructured and converted your positions into warrants? The little warrants I receive a tied up until stock reaches close to 100% of current market price and they expire in 4 years. Thanks!

@jamcfarla Год назад

This is the best explanation of wash sales

@scthurow 3 года назад

Great Content! Please do a video on tax differences between selling futures and selling stocks.

@dawgbrooks5706 Год назад

Thanks

@bharatteakram5907 3 года назад

Learnt so much from you. I am an enrolled agent in New York. Trade full time also. Keep up the good work.

@BrianLeeTrades 3 года назад

Wash sale casualty here, wish I knew this way before!

@user-ub3bv8gs5d 3 года назад

Can't wash sales be really good for you? By increasing your cost basis and also extending the holding period?

@BrianLeeTrades 3 года назад

@@user-ub3bv8gs5d happened to me like 3 years ago where I couldn't carry forward a larger loss on a blow up, in that case it's just a sunken cost that can't be used to deduct in the future

@JonM47 2 года назад

Great explanation thanks man

@saiine 2 года назад

@@BrianLeeTrades What's up Brian, enjoyed your CWT episode!

@supfreshes36 3 года назад

Hey Brian, I recently found your channel and looked into your CPA firm and I'm really glad I did. I found your video on the BEHAVE concept for Mark-To-Market election "requirements" very eye opening, so thanks for that. I currently trade in a smaller but profitable margin account under the $25,000 requirement for PDT limitations, so wash sales are something I'm paying close attention to with the limited number of day trades I'm allotted, so this video is really helpful. I hope you continue to make this type of great content going forward. I had sort of a subjective question for you, if you wouldn't mind sharing your opinion: A lot of day traders suggest that the PDT rule does more harm than good for growing smaller/under-capitalized account values above the $25,000 dollar amount, and combined with the likelihood of being unable to elect the Mark-To-Market election under those conditions for most traders, it makes taking on losses more devastating. Do you share that opinion about PDT limitations for under-capitalized accounts, and if so, I'd love if you had some tips that you've found help smaller account traders like myself become more successful. Thanks again, and I'll look forward to the next video!

@BrianRiveraCPA 3 года назад

The intention behind PDT is to keep newer traders “safe”. I think for traders under pdt not necessarily a detriment to account growth but they just need to pay attention to year-end when taking losses. If the loss is bigger than normal then better to sit out that stock for 31 days.

@scolakamau9050 2 года назад

@@BrianRiveraCPA hi Brian, how or what part do you enter the wash sale disallowed amount when reporting or do l just ignore it. I appreciate your response

@sanbetski 3 года назад

you sir, are awesome! love your videos! more power and hope you get more subscribers! i know i am!

@armandomenchaca5653 3 года назад

Thanks for the info, keep up the good job.👍🏻

@jasonpayne9791 3 года назад

Just found your channel. Thank you for breaking down all the important information Question: I love to day trade TSLA options and have most likely accumulated a ton of wash sales throughout the year. I also hold TSLA stock long term. If I take the "Winter Vacation" approach and not enter and exit any TSLA options at all for the month of December, but hold TSLA stock through the end of the year, would I still be subject to the accumulated wash trades on TSLA? Would it be best to exit my TSLA positions entirely before Dec 1, then buy back in after the new year?

@mounireddy7146 2 года назад

Thanks for the video, does the same wash sale losses automatically be differed to next year or do we have to fill/submit any form while doing taxes?

@natashak5070 3 года назад

Hi Brian - thank you for sharing this, it was very helpful! Would you still pass the test if you receive a w2? Having a full time job and trading on the side?

@MusicalPsycho1 3 года назад

Perfect. Now to qualify as a trader!

@michaelmccaffrey2379 2 года назад

The best advice was in the closing statement do your thing and keep trading.

@Davemad93 3 года назад

Hi Brian, Just stumble upon your channel today and found a lot of great info. I had a question though. If I have a wash sale, is there nothing I can do about it or should I still sell my position before years end? I actively trading this specific security constantly so I still have an open position with it but my wash sale happened last month. I also had another question, I want to avoid this wash sale in the future how should I determine if I should just get the TTS/MTM or create an LLC? Thank you in advance.

@BrianRiveraCPA 2 года назад

🚀 Learn How To Slash $30K Off Your Taxes Without Being A “Tax Expert” Or Spending Money On An Expensive CPA! Free Strategy Session: www.thetaxonomics.com/strategy ⚡ Trader Fyles: Generate your trader specific tax forms! (Coming Soon) ⚡ mailchi.mp/303044cd12e9/untitled-page 🏦 BEST BROKER FOR ACTIVE DAY TRADING 🚀🌚💸 www.interactivebrokers.com/mkt/?src=brianriveray&url=%2Fen%2Findex.php%3Ff%3D1338 ⭐Schedule a Trader Tax CPA Consultation! (Available May - Dec Only) calendly.com/tradertaxcpa/

@starjet888 2 года назад

I’m about to make a big gain and plan on offsetting it with a current play I am down in close to my gain amount. Thanks for the video, I still like the stock that I will take a loss in and but will wait 31 days after I take my loss to buy back, thank you.

@ecollazo7 3 года назад

This video was great, got a follow and a like from me man! Can you help explain this, if I fall into category 2 but end up making a gain after the wash rule, do I still sell in December?

@drumminbeatz 2 года назад

Hey thanks for the information! I have many wash sales this year. Can I still trade other stocks through December and January and avoid wash sales with these trades or will this affect the whole picture? Thanks!

@andymiser7710 3 года назад

Same here! $30k for 2020. Didn’t do it in December and January but was enough to do the damage!

@mizzou8263 2 года назад

Hey. Great video. What day in December do I need to sell out of my wash sales positions to have them resolved for the current tax year

@zmack1830 8 месяцев назад

A Legend explains wash sale....

@GouAndSotsuWereMistakes 3 года назад

Don't have this problem yet, but Im glad I found this since I'm new to trading.

@arehman2000 2 года назад

Awesome video! I'm just a little confused on the deferred loss point. can a wash sale loss be used in the following year? In other words, if I had a wash sale loss in 2020, can I use that loss on my taxes in 2021?

@larsvongraff5794 2 года назад

If you use TDA, make sure to check Gainskeeper every single day you trade for accuracy. If you don’t you’ll be running into likely a lot of additional tax you’ll be paying. It is to say the least not very accurate. Do not rely on their computer to make the calculations for you. Easier to spot if you use some sort of trade journal. But still pretty easy to do even if you trade round trip 10 or more times in a day. If your default tax lot method is LIFO it’s going to be even more difficult especially if you focus on the same names, lot sizes and target sell prices. I scalp equities and therefore this is a strategy I employ to keep trade errors to a minimum. Helps to if you have a very high win percentage. Then you aren’t subject to wash sales to begin with.

@ificatchuatthelight 3 года назад

You're really good man I need to hire you. Love to have a consultation.

@mml1224 3 года назад

good vid brian, can u think of all the robin hooders and bitcoiners , gettin hammered trading gamestop and amc.... irs loves it raises teh cost basis, there fore makn u pay more in taxes....... choose the 475? how ironic u need to let them know way ahead of time to file that officially as if u know if ur gan have more short /long term startegy?

@Cdswjp 2 года назад

awesome

@mrwansabah 3 года назад

Hi, thank you for sharing your knowledge. Can you kindly making a vedios talking about stock market to a novice person in trading business who just started his day 1? Just like when you talk to your kid and trying to educate him/her to start trading

@edwinschaap2773 2 года назад

thanks for the video Brian! so that means that straddling would be impossible during dec-jan? ( i straddle the qqq on a daily basis ) but after jan you the rule doesnt count anymore?

@leemckoy7321 3 года назад

Hey sir, just found you on RU-vid. I live in NC and new to trading. I want to trade as a corp and elect MTM as suggested. What type of Corp should i setup? Would an LLC work?

@robertlago8871 3 года назад

Hey Brian, if I have a wash sale from the SPY that incurred December 14 am I still good or it had to be December 1 to sit out until January? Will this be deferred for the next tax year or can I still claim it this year.

@WoodyBoca 3 месяца назад

"Making a decision based on taxes is never good. " Warren Buffet But, I am sure he has never had to worry about wash sale. Great stuff be safe.

@isaiahdiaz1140 2 года назад

Just sold all my wash sales, going to sit it out for 32 days before jumping back in. Just going to hold long term

@darklight6921 2 года назад

im gonna have an interesting time at the end of the year. i didnt even know it was a thing until i used fidelity.

@kikolas1978 2 года назад

Hi there Brian, congrats on the video. Do wash sales affect short selling? Example. I got an account mostly for selling, I've made money on many tickers but overall the balance of the account is negative. Will I be able to compensate the losses or can the will the shorting losses be considered wash sales and therefore have to pay taxes on the shorts that were profitable? I'm looking at YTD reports from TradeZero but I can't find what is considered wash sales. Thanks so much for any advice you can provide.

@darryl7153 Месяц назад

Brian, you are the man! As of right now, the past month I’m sitting at realized gains of $10,000, and disallowed loss of $100,000. As long as don’t trade at all for 31 days at end of year, do I have anything to worry about?

@besttrader5627 2 года назад

Great video - Q- So if you make $50k profit in a year with 100 stock and paid taxes, next year you lost $35k and now own only 50 stocks of the same, how would the wash sale effect it? should it be a realized loss of $35k? even though you bought the same stock again, but less number of stocks, so your cost basis is low as compare you your previous account balance.

@arletterosario9636 3 года назад

Thank u for th video. What happens when u have two cash accounts . I'm a day trader... If on the first account I have a loss with ABC stock. And on the second account i traded the same stock and I have profit. Can I declare my losses from my first account?

@zhane__russell 8 месяцев назад

So what im hearing is win every trade in december👌🏾. Good information though. I didnt know about this

@rootdesh6069 2 года назад

thx for the video. Just one clarification, if I keep on trading once stock for the most of the year but close my last trade in December which is at loss after the the cost basis adjustments and do not buy it again for 31 days , I am not affected by the wash sale rule right? and I can offset the loss from the gains for the current year?

@JrRdz-rf4lj Год назад

How did this go with the wash sale??.. just curious...

@LostOneTrades 3 года назад

If your recycling shares on a particular stock intraday constantly accumulating wash sales throughout the year, if you dont touch that stock for all of Dec, can losses then be claimed or is it all deferred to the next tax year?

@MarwanFrance 3 года назад

Ive elected MTM status in 2016 and in 2020 i started actively trading and ended up with loss, would that be carry over into next year if there is no earned income enough to offset it ?

@Abundance4LL Год назад

Thats such a messed up rule. We need to get ourselves out this flawed system and create our own

@mterry3788 Год назад

Mind posting the mark to market accounting link (3:04 timestamp)? I didn't see a clickable link in your video nor in the description. Cheers!

@thechrisofalltrades3449 2 года назад

So I was assuming I’d qualify for trader status, but today I realized I needed to elect for mark-to-market trading earlier this year. So now I have to worry about wash sales. Most of my losses are negligible, but there are a few stocks that I traded poorly a few times. I’m thinking if I just refrain from trading any of the stocks with relatively large losses over December-January, I shouldn’t have to worry. Is that right?

@feratrutan Год назад

What is the exceptions in case you want to file for mark-to-market election after irs deadline ? Please Thank you

@alwaysgrateful1215 3 года назад

does wash sales only apply when you sell all or also partial of your shares?

@chrisw491 3 года назад

Does the wash sale apply if I sell partial position? Sold some call options at a loss but still have a few left.

@jvztin.g 2 года назад

Just got a wash sale symbol on one of my stocks.. investing is such a headache for a new person

@andymiser7710 3 года назад

What if you have multiple trading platforms? How would each platform connect with the washsales if the same stocks are traded in the multiple platforms?

@Random.Adventures. Год назад

Hi was wondering if you can add more info about Canada day trading if possible thanks

@pbname7905 Год назад

Hey Brian. I just learned, the hard/accidental, what a wash sale is. AMC did a "Dividend" split. NOT! Dividends are Green Gains. This was more like a 2:1 split. I thought I was given dividends in APE and I sold them because I was going to put the gain/profit back into AMC. I didn't want APE and wanted to get my cost down on the AMC. I bought back 10 shares of the APE after selling, within a few days, and created the wash sale which I was not familiar with. Can I GIVE/Gift all of my AMC to my nephew? It is my understanding that I can't buy any AMC because it is similar to the APE. I don't want to create another ignorant/uneducated Screw UP! Thank you for your time and enjoyed your video. You are easy to listen to. TC. Linda

@Jbig1430 3 года назад

If I am unable to claim a wash sale loss for this year when can I claim wash sale loss? Can I claim the full loss next year when completing taxes.

@daytradingwithchris5324 3 года назад

What about 401k? I like you dude, I make sure to close out all my positions in november to be safe... Im interested in hiring you for services, looking for a good CPA, I use Tradelog to make sure Im good for EoY, but considering going MTM if applicable

@sjtola 3 года назад

Regardless of type of loss in a non roth retirement account, since all contributions are pretax, you can't claim any tax benefit from trading losses in IRA, correct?

@Thepianobird 3 года назад

So can you avoid wash sales taxes by simply exiting the security before new years? Is there any immediate impact of wash sales flags or does it all happen at the end of the year?

@raulcolon7627 Год назад

Hi bBrian! What is the best way to get in contact with or your firm?

@ayarborough12 2 года назад

Hi Brian. If I sell a put and roll it because it's losing but I collect a credit from the roll, does that count as a wash sale?

@kempd002 2 года назад

Does this apply to rolling options?

@koraykaplanmbacc2683 3 года назад

Great video training Brian, thanks a lot. I triggerred wash sale rule with $AMC stock and I am not a short seller. I am under PST. I made profit and re-bought it at $61 and automatically TDAmeritrade bumped up my cost to $65.28. This is not happening with my other stocks. What is your take on on this? Thank you in advance for your response. Sincerely, Koray

@Vanpham-xe3oj 3 года назад

So can I just do what I want during the year and then close my position in December and wait it out?

@CHEEZWHIZ62 2 года назад

Etrade automatically adjusted my buy price from a wash sale. I shorted a stock in Dec for a loss and than did the same thing in January. I shorted it at 3.48 and was in the green for the day. I went to bed up almost 3 grand. The next day I was down with a buy price at 3.33. All my profit was erased and now I was hoping the stock would drop even more. Sold it at 3.28 in a panic but I was still in the green. That could of got ugly quick.

@carlmazziotti221 3 года назад

Quick question. Very well explained btw. New subscriber here. So if I'm understanding this correctly IRA = total loss of the loss if you buy back a stock within 30 days. It'll be like the loss never happened even if you sell the repurchased shares at an even greater loss a week later. Non-IRA, if you take a loss and buy it back within 30 days the loss will be added to your cost basis of the repurchased shares. The only thing you are loosing is the ability to realize that loss until you truly close that position for > 30 days. That makes total sense since if you took a 3k loss and immediately bought those shares back and the stock recovered, then there was no actual loss. The only danger is in the IRA situation, or in the event that you needed those losses to offset other gains for the year. Am I understanding that correctly? What confused me is your example of the 6 figure sale and repurchase at the end of the year. If he sold a position at a loss there would be no taxes to pay. If he repurchased that position within 30 days the loss is simply added to his new coat basis. Where is the negative?

@marylou7230 2 года назад

Do you have to set up an LLC before actively trading in order to take advantage of tax benefits for losses?

@cindykchu 2 года назад

do you actually do tax for others? I have lots of wash sales that i need help on my tax. thanks

@ZDeCarlo576 2 года назад

Close out any time before December 31st? Or it has to be done prior to December 1st?

@thatOneGuy435 2 года назад

Hi Brian, question for you. Say I incur wash sales for year 2021, but I then make the mark-to-market election for 2022. Can I still claim the wash sale losses for year 2022 (that rolled over from 2021) even though wash sales no longer affect my account? If so, how would I do that? Do I still need to wait the 31 days in December? Any help would be appreciated, thanks!