Hi DianeW777,
EDIT: I got a detailed response on the other thread with the bad news. Sounds like they need to have the MTM designation or they will owe hundreds of thousands of dollars b/c of the wash rule (even though they didn't make that much). I'm going to direct them to this thread to ask their own question in light of how bad the news is. :(
I asked this on another thread but see you are a guru at this and I am trying to help a friend who is really scared right now.
QUESTION:
I understand the rules for Wash Sales, but saw a scenario where someone seemed owe hundreds of thousands of dollars b/c of day trading all year where the gains all were calculated but the 1099 from Broker showed most all losses were disallowed.
Does that person need to pay taxes on all of the "fake" gains (hundreds of thousands) b/c most of the losses show as disallowed? The stock dropped from then the following year, so no gains ever materialized to be able to realize in later years it seems.
OR is it correct protocol to edit the "disallowed" losses due to wash sale on the 1099 Broker form to accurately show the true net gain (if any)?
Mainly the issue is the fake gains being taxed b/c of disallowing all of the actual losses due to the wash sale rule.
They are panicking! I remember seeing great advice on here before, so thought I'd check here.
Thanks so much for any insight.
