I lost my job due to the pandemic, so I decided to try to learn to be a day trader. To start my endeavor, I withdrew 60k from my ROTH IRA to take advantage of the cares act 0% early withdraw penalty and ability to spread the income taxes to be paid on it over 3 years and I used about 40k from savings.
I had significant realized losses (40k actually) that I want to treat as ordinary so that I can fully offset my unrealized gains with 2020's realized losses and not be penalized by the wash sale rule. I'm standing at about 7k total loss when you factor in unrealized profits due to investing in crypto.
I did not elect 475 in 2020 or TTS, but I do qualify. However, I established an LLC in December of 2020 for the trading business.
What is the best way to not be disenfranchised from the wash-sale rule?
If I treat the loss as capital gains, it only wants to let me deduct around 20k of the 40k actual losses.
