@M-MTax
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So say I trade XYZ stock every month, but suffer a loss in one month. Does that loss ever get deducted? Even if I stop trading it in October?
Yes. All of your CLOSED positions are "deducted" no matter what. The problem comes in where you have a loss in XYZ on a buy/sell and then open another buy position in XYZ. What happens then is your loss is not recognized but that loss is added to the basis of your XYZ position.
I mean as in this is the amount I actually made, which as it stands now is 12K.
What I mean is paper losses are realized while actual losses are recognized for tax purposes unless you elect MTM or there is some law or reg that says otherwise.....like the wash sale rule. In a wash sale you realize a loss but you do NOT recognize the loss for tax purposes until you close the position."
Thank you for the straight forward answer, honestly you deserve the best answer reply here, but I gave my word to critter. As others wanted to turn this into more of a personal thing, like "guy don't worry about Sec 475, you don't even qualify". Which ironically as they even pointed the IRS decides that, no one else.
Like I ran a small business, have an MBA and Bachelors, reached out to my broker, sought out multiple articles and I could not get a straight answer until it came from you. Like I just needed someone to confirm my understanding of the rule. That as long as I stop trading in October, giving a 61 (for safety, I will give 61 days) day break from any stock, my losses will count for this tax year. However, as you saw multiple people tried to take it off topic and make it something personal. Not sure why, but if they did not know the answer, I was more then willing to accept "hey, I don't really know the answer on that" or "I am not really sure on that".
However, thank you very much for the straightforward answer. As mentioned, I just needed someone to confirm my understanding, that as long as I stop in October or November, I am good. Give a 61 day break and the IRS will not say "hey you actually made 1mil somehow, even though your account is only 37K".
@M-MTaxAgain, thank you very much.
