Robinhood daytrader owes 800K to IRS on a profit of 45K

.. because he was ignorant of wash sale rules. I wonder - will the IRS take pity on the guy?

https://notthebee.com/article/robin...fhmVyz4R8V9AlCajNUPnbMcAn81MSWxeY9AdXk8NMtNSA

 

Perhaps he can claim trader tax status.

 

I am pretty sure that can't declare it post factum. Maybe I am wrong.

 

It’s too late, you can’t claim it for past years.

 

Unless he traded 1256 contracts, he’s hosed. He has 800k of losses he can take 3k at a time.

 

Would be interesting if the IRS didn't budge and this was taken to court...

The unfairness of trying to get 800K in taxes out of someone who earned 45K is so blatant that maybe the court would set some kind of precedent invalidating the wash rule, within certain limits.

 

this isn’t the first time this has happened.

and ignorance isn’t an excuse

 

Worth a read:

https://greentradertax.com/how-to-avoid-taxes-on-wash-sale-losses/

 

How would the 1256 contracts help him? There's no wash sale on only those contracts. Unless im wrong here. Im assuming he was only trading stocks.

 

There is something wrong with this article. According to this article a day trader can never deduct a loss if he/she trades the same stock all the time. If this is the case there should be much more people suffering from the wash sales rule than just one guy.