Day Trading

[vfx282828]

for our 2025 tax year : if someone day trades, how would they not be able to take all gains in the same year if they exited all positions by December 31st and waited the 31 days to buy anything back? i’m confused on wash sales and just have heard situations where someone is day trading through the year and sells all their stocks by the end of the year and is left with a huge tax liability

[Bsch4477]

Any sale during 2025 is reported on the 2025 tax return. Any capital gain or loss is reported then. 

[rjs]

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@vfx282828 wrote:

if someone day trades, how would they not be able to take all gains in the same year

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The wash sale rule does not disallow gains. It disallows certain losses. You always take all gains in the year that they occur.

I can't comment on what you might "have heard" without any details. What you "have heard" might be mistaken, or the day trader might have actually had a large net gain for the year, or the day trader might not have calculated gains and losses correctly. Handling wash sales gets very complicated when there are a large number of transactions.

You might find the detailed explanation at the following link helpful.

The Wash Sale Rule