3 ms·

Wash selling, add this strategy is known, is not actually legal in the U.S. Years ago at a firm, I had a client they to convince us to do this for them. The pa

Wash selling, add this strategy is known, is not actually legal in the U.S. Years ago at a firm, I had a client they to convince us to do this for them. The partner told them they weren't paying us enough for him to risk the prison time. And yes, if you get caught, you still pay penalties, and interest, and if the amount is large enough you can look forward to a taxpayer paid vacation to a minimum security federal penitentiary.

hn_throwaway_99 4y ago
You should read the article.
- gamblor956 4y ago
  I did read the article. The entire article is about wash trading. The thing about tax is that "strategies" like this which are clearly contrary to the intent of the law but which technically fall within the letter of the regulations can be made explicitly illegal after the fact, so the lack of prosecutions to date is not an indicator of their illegality. See the Bermuda loss harvesting scandal from the early 2010s. Goldman's partners are simply banking on being able to place enough former employees in the regulatory agencies to get away with it this time. It didn't work for the Bermudan loss harvesting schemes and it probably won't work this time.
  - hn_throwaway_99 4y ago
    The whole point, though, is that tax-loss harvesting is perfectly legal, so why is it fair to move the goalposts as to what counts as a wash sale? As the article states, "But well-tuned software could easily find the right stocks to keep the accounts tracking the market." So the law says you can't sell A and buy A back immediately and count it as a loss, but it says nothing against selling A and buying back B that happens to be strongly correlated with A. I'd argue that isn't even against the intent of the law (or at the very least this law is so poorly thought through that its intent is ambiguous).

3 ms·

Wash selling, add this strategy is known, is not actually legal in the U.S. Years ago at a firm, I had a client they to convince us to do this for them. The pa

by gamblor956 4y ago

hn_throwaway_99 4y ago
You should read the article.
- gamblor956 4y ago
  I did read the article. The entire article is about wash trading. The thing about tax is that "strategies" like this which are clearly contrary to the intent of the law but which technically fall within the letter of the regulations can be made explicitly illegal after the fact, so the lack of prosecutions to date is not an indicator of their illegality. See the Bermuda loss harvesting scandal from the early 2010s. Goldman's partners are simply banking on being able to place enough former employees in the regulatory agencies to get away with it this time. It didn't work for the Bermudan loss harvesting schemes and it probably won't work this time.
  - hn_throwaway_99 4y ago
    The whole point, though, is that tax-loss harvesting is perfectly legal, so why is it fair to move the goalposts as to what counts as a wash sale? As the article states, "But well-tuned software could easily find the right stocks to keep the accounts tracking the market." So the law says you can't sell A and buy A back immediately and count it as a loss, but it says nothing against selling A and buying back B that happens to be strongly correlated with A. I'd argue that isn't even against the intent of the law (or at the very least this law is so poorly thought through that its intent is ambiguous).