Hey guys,
I suspect this has to do with tax lot treatment, but I ran into an account that had $100,000 in the start of 2015, and closed pretty much break even, say around $101,000 by the end of the year. But through the year, there were numerous trades (over $1 million worth of buy/sells). Thus, it seems like there has been a positive taxable gain generated for the year. I'm showing about a $10,000 taxable gain for the year (even though the net equity in the account at year end is break-even at about $101,000).
So, the question is:
1 Why did this happen? (tax lot treatment? I am slightly aware of wash sales which may be the culprit, and FIFO/LIFO/etc. but not an expert)
2 What can I do for next year to optimize upon this? Obviously if you break even in net equity by year end, you'd hope to not generate much taxable gains if any. If you have numerous trades for the year (well, say over 500 trades), how does one possible go about optimizing upon this?
Any inputs from experienced retail traders appreciated..
I don't know what's going on here. Sounds very suspicious.
I know this is kind of a stupid comment, but I'm assuming there were with no withdrawals during the year to affect your ending balance?
Also agree with your assessment point 1 - probably some non-qualifying losses such as wash trades.
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