5 ms·
The wash trade rule is to prevent people from taking a loss at the last day of the tax year to offset gains in other securities. Then re-buying it on the first
by rmah 6y ago
The wash trade rule is to prevent people from taking a loss at the last day of the tax year to offset gains in other securities. Then re-buying it on the first day of the next tax year to "reset" the cost basis. In short, it's to prevent tax evasion shenanigans. Tax law is complex because people will spend a lot of effort to find loopholes. Closing these loopholes one after another creates the complexity.
- marshray 6y agoBut why shouldn't you be able to take your losses at the end of the year if you so choose? It makes no sense.
- infinite8s 5y agoYou can, but if you buy back the next day on the new year (and the price didn't move) you didn't actually take a realized loss.
- varispeed 6y agoHow do you take a loss? Do you organise a press conference and then tell the media that the company you have shares of is bad? Wait for the shares to tank, sell. When the new tax year comes, buy all the shares and then organise press conference again to say sorry and it was just a prank?
- JumpCrisscross 6y ago> How do you take a loss? Portfolio of a hundred names. Half went up, half went down. Sell the downs on 31 December and buy back in 1 January (spherical cow). On the off change nothing in your portfolio lost money, congratulations. Also you don’t get this.
- varispeed 6y agoRight, so you don't actually have a control over making loses at the end of tax year and if you buy back, there is no guarantee the stock will ever go up. So what is the issue?
- infinite8s 5y agoYou didn't actually have a loss that year (to offset gains)
- deleted 5y ago[deleted]