Components
The dangers of DIY investing: $800,000 tax bill on $45,000 of profit
February 8, 2024
SKU:
BUS-009859 Region:
North America
Topic:
Accounting & Finance
Length:
3 pages
Keywords:
day trading, taxes, wash sales, active investing, passive investing
Copyrighted by:
Society for Case Research
Student Price:
$4.00 (€3.71)
A new day trader discovered he owes $800,000 in taxes on a net profit of only $45,000. The trader contacted Brian, a financial planner, for help. Brian wondered if the tax preparation software used by the trader was calculating the taxes correctly. Brian also thought perhaps the trader did not follow the IRS’s wash sales rules, thus negating many of the investment losses that could have been used against investment gains.
Learning Outcomes:
In completing this assignment, students should be able to:
1. Explain the importance of monitoring wash sales by different types and classifications of investors.
2. Demonstrate an appreciation of the competencies needed to be a successful investor.