Case Study 66: Wash Sales - MTM Trader Tax Liability - Loss Year

Index - https://steemit.com/tax/@alhofmeister/rqgmk-tax-blog-index

Introduction
The purpose of this posting is to further demonstrate the effect of the wash rules on securities purchased 30 days before/after the sale of the same (or substantially similar) security for a loss. As there is a requirement that there be a high frequency of trading for someone to be considered a trader under the IRS standards. The purpose of this post is to examine the income tax consequences of being treated as an trader that made a mark to market election under IRC 475. I've changed the proceeds to reflect a loss year in order to further explore the consequences of one categorization versus the others.

Problem
Taxpayer A actively trades Bitcoin in order to take advantage in short term swings in the market. The diagram below shows the year end fact pattern as well as the income tax.

Solution

References
https://steemit.com/tax/@alhofmeister/wash-sale-rules-cryptocurrency-application
https://steemit.com/tax/@alhofmeister/case-study-48-wash-sales-advanced-january
https://steemit.com/tax/@alhofmeister/case-study-49-wash-sales-advanced-february
https://steemit.com/tax/@alhofmeister/case-study-50-wash-sales-advanced-march
https://steemit.com/tax/@alhofmeister/case-study-51-wash-sales-advanced-april
https://steemit.com/tax/@alhofmeister/case-study-52-wash-sales-advanced-may
https://steemit.com/tax/@alhofmeister/case-study-53-wash-sales-advanced-june
https://steemit.com/tax/@alhofmeister/case-study-54-wash-sales-advanced-july
https://steemit.com/tax/@alhofmeister/case-study-55-wash-sales-advanced-august
https://steemit.com/tax/@alhofmeister/case-study-56-wash-sales-advanced-september
https://steemit.com/tax/@alhofmeister/case-study-57-wash-sales-advanced-october
https://steemit.com/tax/@alhofmeister/case-study-58-wash-sales-advanced-november
https://steemit.com/tax/@alhofmeister/case-study-59-wash-sales-advanced-december

Disclaimer
Any accounting, business or tax advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties.