Saturday, April 25, 2020

Avoiding the WASH RULE

This post is a continuation of the $50 a month stock challenge I started October 14, 2019.  Click on, "No Commission Stock Trades", on the right side of the page to read from the start.

            $381.94 self-imposed April trading limit.
            2% of $381.94 = $7.64 April profit needed.

     I was asked to explain how I designate the shares I am selling when I have some at different price points.
    First let me explain why this is important. If you sell shares at a loss, you cannot repurchases shares for 31 days or your loss cannot be used to offset your profits to lower your tax base.

Example is my BRY trades
 02/21/2020....2 BRY @ $7.30
 04/13/2020....8 BRY @ $2.39

     On 04/14/2020 I sold  8 shares $2.64.  The standard brokerage procedure is to sell the sold shares first, First in- First -out ( FIFO). Had I not designated I was selling the 8 BRY @ $2.39, my broker would have sold 2 BRY @ $7.30 (FIFO) and 6 BRY @ $2.39(of the 8).

     Since the 2 BRY @ $7.30 would have been sold at a loss, I could not purchase any additional shares for a month because of the wash rule . Since I did not want the to occur, I sampling designated the shares I wanted sold and therefore not incurring the "wash rule".

     All my trading is done online with E-Trade or TDAmeritrade using the "Think or Swim" trading platform.

     Unfortunately the "Think or Swim trading platform" (where I usually do all my trading) does not have the option to designate the shares you wish to sell but you can long-in to your regular TDAmeritrade account and do it there.

     These are the steps 

     Log on to your TDAmeritrade account.

Click on "Trade"

Choose the "STOCKS & ETF"

I will cover each box by number

1. ACTION = click on the "arrow" and this "drop-down menu" appears and you can choose the "action" needed.

2. QUANTITY = simply fill in the number of share you wish to sell.

3. SYMBOL = add the symbol for the stock


from the "drop-down menu" we choose a "limit order"

5. PRICE = since we are doing a "limit order" we add the price here.


this "drop-down menu" lets us choose how long the order is good for.

If you have more than 1 "buy" of a stock that I am selling another "drop-down" will appear.

7. Tax Lot ID Method

this is where to select what shares you want to sell.

This is ONLY for TDAmeritrade as all brokerages are different.

My E-Trade account is different, (I only use the E-Trade website for trading and do not use their trading platform) when I enter a sell order with different lots this shows up.

when I click on "Lot Selector" a drop-down menu shows each lot and I can choose shares from that list to sell.

I can pick and choose from any lot to reach the amount I am selling.

The amount you receive is the same but the shares you sell impact the taxes that you owe.

Disclaimer, I am not a professional
your comments are welcome and appreciated or


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