How Can You Owe $800k in Taxes on $45k in Profits?

[@brian782]

Why isn’t anyone talking about how wrong the tax rules are for this individual? It shouldn’t be this way

[@meesi7053]

These wash sale rules should be for corporations and hedge funds, not for the individual investors

[@michaelgordon3241]

These rules should not be used period. I'm sitting on 32k of wash sales but I'll figure out a way to offset any capital gains.. I like trading the same asset because you get an idea of trading ranges, especially volatile assets like leveraged etns..sometimes for risk management you may sell half or 100%, go back in when the price is 10%+ lower and then capitalize on a 30-40% upswing. This law would require me to get decimated,staying in a trade that drops 10-15% sometimes on ex dividend date..So, if a wash sale means protecting my capital from a 50% decimation to make a 30% -50% profit on an upswing, I'll do it anyway. Sometimes I'll buy something new and lose on purpose. Margin acct up 15% without any realized taxable capital gains..

[@afterdark6822]

Agreed

[@memecat84]

The IRS gives it to the little guy, yet again. This rule was made to keep us down for eternity.

[@jahnjohn8849]

This analysis is wrong. I suggest you delete this post and ready a bit more about washsale. If you avoid washsales in December and January.. you will be fine

[@omarnasr1844]

Wash sale doesn't mean you cannot claim the loss. When a wash sale is triggerred the amount of loss is added to the cost basis of the new investment. This essentially defers the loss until a later date when that investment is eventually sold off. My guess is this person had a big loss going into December in one or more particular stocks that he overly traded, sold these shares in December but bought them again before the end of the year and did not close the position. In this case the loss is disallowed

[@ProfitsInYards]

Would he then be able to add those losses the following year?

[@kinglegginc9952]

So he had 800k In losses?

[@ichigokurosaki7762]

So he could have done this all year and if he did not do any trades all of December he would have been fine?

[@ProfitsInYards]

I'm not a dumb person but feel this doesn't answer the question, but I do appreciate the attempt.

[@funez-]

So does he have to pay the 800k?? What if he doesn’t even make close to paying that.

[@lakshaydilawri489]

The wash sale changes the cost basis of the security being held. So even if the loss is disallowed the gains will change based upon the adjusted cost. Are we missing something here?

[@rayuken1]

Pretty sure there’s something missing. You don’t pay 800k on a 45k profit. If his realized gains was 45k, article is click bait. Another thing said he had capital gains of 1.4m which would put the tax more in line. Dude might have lost it all in Jan and ended up with no money to pay his taxes. Seeing as there’s no update just makes u think shits fake.

[@alexm-2033]

Complete horse shit

[@jackc7327]

It's true unfortunately. I netted a loss of 7,000 dollars and now I'm going to owe over 340,000 in taxes all due to wash sales. I'm not going to be able to pay so there's only one option.

[@alexm-2033]

@@jackc7327 can you explain how

[@tolek3924]

​@jackc7327 hay how ypu story ends?? I revive 650k omg and I lose 20k never do wirdhwal this is crazy I don't know anything about this??

[@ambidextrousTrades]

But every time he made a wash sell, his cost basis would’ve been adjusted so he wouldn’t have a capital gain UNTIL he overcomes his loses and became profitable again on that particular stock or stocks that he was trading regularly. So how can there be such a big capital gains tax with the net profit of only $45,000??

[@cryptochello2808]

This rule should have a first time forgiveness clause

[@ryantyson2008]

Absolutely!

[@danorganplayer]

Question: I got my Robinhood Summary with a high wash sale disallowed. My grand total net gain/loss is in the negative though. So what would this mean for me?

[@nainoapeterson7871]

@@danorganplayer we in the same boat buddy lmk if you find anything

[@danorganplayer]

@@nainoapeterson7871 I input the consolidated 1099 in TurboTax and the summary net gain/loss was the same. Seems it's included.

[@jjfeng4564]

The title of this video is misleading. Margin trading is risky but is orthogonal to the wash sale issue.

[@EriPages]

Orthogonal....HUH....WHAT!?

[@EriPages]

Taxes need to simplify. All trading tax shouldn't be simplified to "are you NET profitable or not?". Simple.

[@Cutzamala]

What I'd u traded the same stock and loss but when back in all year and sell in December and buy until January?

[@michaelgordon3241]

He had over 1.5 million in capital gains trading which is why he had such a huge tax bill. I dont know why you mention proceeds without cost basis. I have tons of wash sales but not even close to 100k in capital gains let alone 1 million in capital gains. I'm glad Schwab automatically calculates everything. The market doesn't always wait 30 days. Proceeds minus cost basis plus wash sales=taxable realized capital gains.

[@Dee--Jay]

So basically if I buy a stock for $10, I sell it for a loss at $9. I buy it back at $9.50 and I sell it for $11. That is a profit of a $1.50 per share. But actually I only made 50 cent per share because of the $1 loss in the beginning. So my question is am I paying taxes on the 50 cent or the whole $1.50?

[@mulloolyassetmanagement]

Hi and thanks for your question! The first transaction you outlined contains a capital loss (buy at $10, sell at $9). That loss on your taxes would be disallowed IF you buy the same security within 30 days. There is more to it than that, but this is the concept behind the wash sale rule.

[@kinglegginc9952]

@@mulloolyassetmanagement would it not just get rolled over tell he closed the position?

[@jared19882]

You would only pay $.50, see my comment above.

[@vickipedia3253]

Whole $1.50 😢

[@michaelgordon3241]

I don't think wash sales are a big deal. The market doesn't always wait 30 days for a buying opportunity. So if you bought something at 20/share but because of disallowed losses your average price is 23/share and the stock goes to 22, you're going to pay taxes on your profits unless you have allowed losses that offset your capital gains. The guy in this video was using margin. His capital gains were more than 45k. He has to pay gains on the margin he borrowed.

[@inerlogic]

You just gave me a panic attack, are options subject to the wash sale rule? Rolling? If i sold 60k worth of premium and bought back 45k, am i paying taxes in 15k or 60?

[@ohelio2766]

Man I lost $2,000 in the past three years just selling and buying $300 here $800 there $50 here nothing crazy ending up racking up $62,000 in processeds now I owe the IRS $15,000 I make $30,000 a year at my job I’m only 21 my car just broke down 1 month ago, I got court on March 2nd I owe about $3,000 in debs just all around I’m a fucking mess I need to just pay every one back

[@mrclassix2002]

You can file bankruptcy and start over

[@zoefofo7769]

Shit the same thing happened to me. I took 17,000$ lost with Nvidia. I got right back in it.

[@michaelgordon3241]

But if you made money on NVIDIA so what? Would you rather lose put on an entry point because of a wash sale? Some stocks are so volatile that it's hard to avoid wash sale. Now if you were down for the year and still owed taxes that's one thing..but if you're up,you're up...this guy had 1.5 million in capital gains..that's why he had such a high tax bill

[@AtGame7]

You run a money management firm and wouldn't hire a guy who made a 50% gain in one year? I'd rethink that choice.

[@graveyarddoji9620]

Wash sale is stupid. Does not apply to futures trading.

[@vickipedia3253]

This video answered nothing.

[@sunnysgadgetreviews5886]

Can the wash sale losses be carried over to next year? My 2022 Webull statement shows 200k net loss with 260k disallowed wash sale. That turned to 60k gains instead of overall loss and I have to pay tax on the 60k. Basically, one type of loss - another loss is gain. Wash sale losses are like gains.

[@tolek3924]

Man you find out I have bill 650k wtf

[@sunnysgadgetreviews5886]

@@tolek3924 I tried two different tax software and both treated them exactly same. Wash sale losses are same as gains. Even if we have overall net loss, if wash sale loss is higher, the difference is taxable Maybe consult with a tax professional who has experience with trading.

[@tolek3924]

@sunnysgadgetreviews5886 omg what to do next im so scary I completely don't know about this thisnis sick

[@sunnysgadgetreviews5886]

@@tolek3924 Looks like brokers add cost basis on the wash sale loss, not the actual loss amount. I think that's wrong calculation. Wash sale losses should be total of the losses on the wash sale trade, not the whole purchase amount. Need to talk to your broker and see if they are adding up only the losses or the whole cost.

[@AT-sn9yo]

I am calling bull on this story has to be way more to what this gentlemen is saying

[@Onthelauchpad]

Great job explaining this.

[@beastiebboy123]

Is he going to have to pay the $800k or will he be able to reduce the tax payment?

[@popcycles]

So what happened to that guy?

[@FredLohmann]

The Curtis Granderson episode.

[@motivateinmotion5073]

Never use Margin unless you have money

[@userfr95333]

So why again isn't he using the mark to marker method?

[@blessedhoney8512]

He probably didn’t know about wash sale

[@robertkreiss1422]

One of your best

[@davidfolts5893]

Gamification of investing will put money in the wrong people’s pockets.