note some things about wash sales (WS). when you have a WS the loss is not allowed. the loss gets added to the tax basis of same security that created the WS. also, the holding period gets tacked on to the security that created the WS. that loss only gets recognized when you dispose of the security either at a gain taking into account the WS loss adjustment or at a loss and don't reestablish the position for the next 30 days. things can get even more complicated if you have an IRA. In 2008, the IRS issued "Revenue Ruling 2008-5," in which it addressed the question of whether the wash-sale rules apply to IRAs. In the ruling, the IRS explained that when shares are sold in a non-retirement account and substantially identical shares are purchased in an IRA within 30 days, the investor cannot claim tax losses for the sale, and the basis in the individual's IRA is not increased (this means the loss will never be recognized for income tax purpioses).
traders can avoid the wash sale rule by making the mark-to-market election under IRC 475(f). if your do 20-30 trades a day (over 1000 per year) you probably would qualify to make the election. if this piques your interest consult a tax pro. it's too late to do it for 2023.
