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Sorry, supernoob tax questions...
Sorry if this is super noobish, but I was wondering how taxes are handled if you are not considered a trader by the IRS?
Do they tax every gain you obtain? Meaning every transaction - entry to exit - that generates a profit? Or is it based on overall account value at the end of the year?
Oh, I know this is just a very simple way of looking at it, but I didn't want to get into all the wash sale rules stuff and other tax concerns right now. And yes, I do plan on talking to an accountant.
You're taxed on your net realized gain, if any. For example, if you sold stocks for a $10k gain and you sold stocks for a $7k loss, you'd be taxed on $3k.
And yes, wash sales can throw a monkey wrench in that equation if you're not careful.
Since you mentioned the term Wash Sales (which was unfamiliar to me) I decided to look up the term and the consequences. Found a great link here for info:
http://www.fairmark.com/capgain/wash/ws101.htm
Thx for the info everyone.
