Phantom income

Forum|Forum|5 years ago
April 1, 2021
1 reply
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Due to flattening boxed positions of stocks I bought to cover on Dec. 31st and also because of disallowed loses I have $500,000 of phantom income for 2020. Losses will be on 2021 return and I probably won't be able to use based on 3000 write off cap. Do you have any any suggestions on what I can do to avoid the $204,000.00 tax? or at least moderate it.

ErnieS0

Level 15

There's nothing you can really do at this point in time since 2020 is over. You are not able to use 2021 losses to offset 2020 gains. This happened to a lot of people who began day trading for the first time during the dot-com bubble.

You can check to see whether all your transactions are being reported correctly.

If you have a tax penalty you can try to annualize your income if most of your gains took place towards the end of the year.

The IRS also has payment plans.

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