For stock or option washsale rule. Say one has entered a stock or position multiple times and now by end of year they are at profit. Would the washsale rule disallow the at loss trades?
e.g:
- sell XYZ & cover in 5 days (-$100)
- buys XYZ & sell in 5 days (-$100)
- sell XYZ & cover in 5 days (+$100)
- buys XYZ & sell in 5 days (+$100)
.
.
.
By the end of the year, 2 scenarios:
1- the trader has net loss of -$100. I believe if they dont trade for 30 days between Dec and Jan, they can claim the total loss, given they has closed all their positions in Dec.
2- and this is where I'm a bit confused: the trader has net gain of $100. Would the losses be not realized and accumulated or as the trader opens a new trade they cancel with the next profitable trades until the last trade, and it all depends on last trade? To me the accumulation of washsales is unlikely as one trader may have thousands of $ in accumulated profit and losses that the profits are taxed and losses are not recognized while the final net gain has been negligible!!
Each transaction stands on its own so each wash sale is counted.