IRS Audit — day trader wash sale confusion

I'm in a difficult situation and trying to figure out my next steps.

day trader wash sale confusion. I've been dealing with this for about 11 weeks now and the situation isn't improving.

I have already tried to resolve this directly but the other party is not cooperating.

Should I hire a lawyer for this or try to handle it myself?

I specialize in this area of law. Here's my take on the legal issues.

There are several legal theories that could apply here. The strongest is probably the relevant statute, which requires showing actionable.

You should consult with a local attorney who handles these cases. Many offer free initial consultations.

NAL, but from what I've read, you should file a complaint. That said, definitely get a lawyer to look at the specifics.

NAL, but from what I've read, you should file a complaint. That said, definitely get a lawyer to look at the specifics.

Been there. Here's what I learned.

In my case, it took about 2-4 months to resolve. The key was hiring an attorney to send the initial letter.

Been there. Here's what I learned.

In my case, it took about 2-4 months to resolve. The key was hiring an attorney to send the initial letter.

Been there. Here's what I learned.

The biggest mistake people make in this situation is filing with the appropriate government agency. I'd recommend gathering evidence first instead.

NAL, but from what I've read, you should document everything. That said, definitely get a lawyer to look at the specifics.

Been there. Here's what I learned.

In my case, it took about 1-3 months to resolve. The key was escalating to a supervisor/manager.

I had a similar issue and ended up consulting with an attorney. It was worth the $200-300 for the initial consultation just to understand my rights.

NAL, but from what I've read, you should check your state's specific laws. That said, definitely get a lawyer to look at the specifics.

I had a similar issue and ended up consulting with an attorney. It was worth the $200-300 for the initial consultation just to understand my rights.

I went through almost the exact same thing.

The biggest mistake people make in this situation is filing with the appropriate government agency. I'd recommend gathering evidence first instead.

I went through a wash sale audit nightmare in 2024. The IRS wash sale rule under IRC Section 1091 is far more aggressive than most retail traders realize.

Key issues:

• The 61-day window applies both ways. You cannot repurchase a substantially identical security 30 days before OR after selling at a loss.
• It applies across accounts. Selling at a loss in your brokerage and buying in your IRA within 30 days is still a wash sale.
• Options on the same stock count. Buying call options within the window triggers the rule.
• Your broker 1099-B may not catch all wash sales. Brokers only track within their own platform.

The disallowed loss gets added to the replacement shares cost basis. But constant day trading wash sales can create phantom taxable gains. I lost $12,000 trading one year but my 1099 showed $8,000 in gains from compounding adjustments.

My advice: consider a Section 475(f) mark-to-market election. It eliminates wash sale issues entirely. Talk to a trader-tax CPA first.