Sorry if this is a bit basic, but I am new to this. I have several positions in a single volatile stock that I have built up over the past few months. Even though most of my current positions are showing a loss, I still have a net profit overall because my initial purchase price was so low.
If I were to sell all my positions today (just hypothetically), would the wash sale rule apply to the losses if my overall sale results in a gain? I am hoping it would just be reported to the IRS as a net gain.
I am trying to understand the implications of selling all my stocks to potentially take advantage of future dips (kind of a light swing trading approach) in order to lower my average price per share or increase my stock count.
It is applicable to every share separately. However, if you terminate the position entirely and don’t reopen it, that is, buy back shares—within the next thirty days, there won’t be a wash sale.
Due to fear and many partial explanations, a potential problem arises when trading heavily with significant gains and losses that would normally offset each other, but end up deferring those losses to future tax years. This results in a taxable gain in the first year and a loss in the second year that cannot be carried back.
To avoid issues, don’t carry deferred losses into future tax years.
That is how it’s reported. The $400 in losses from those trades were carried over to other trades. As a result, the gain or loss from your other trades would be $400 less.