Tax Question with Wash and a Loss

[hogtrader 10]

I purchased 600,000 shares of a company around the 0.08 cent range in march 2011. I sold 600,000 shares in late november 2011 for a $300,000.00 profit. In the 1st week of december I reinvested in the same stock at a $1.00 stock price leaving me with 300,000 shares I have held my position through 2012 and no the stock sits at the .25 cent range. will I be taxed on original $300,000.00

 

I have a tax extension until october 16th 2012

[gosu 10]

I purchased 600,000 shares of a company around the 0.08 cent range in march 2011. I sold 600,000 shares in late november 2011 for a $300,000.00 profit. In the 1st week of december I reinvested in the same stock at a $1.00 stock price leaving me with 300,000 shares I have held my position through 2012 and no the stock sits at the .25 cent range. will I be taxed on original $300,000.00

 

I have a tax extension until october 16th 2012

 

You are taxed on the $300,000 for 2011. It is unclear what you mean by "wash and a loss." According to your facts, you have no loss for 2011 and therefore do not have a wash sale under section 1091. Currently you have an unrealized loss in the stock you are holding.

 

Your situation is such that you may end up paying tax on a gain that might be overstated in light of a later trade. Unfortunately, the trades were in different tax years and so their results cannot be combined. There was a time when individual taxpayers could average incomes over a 3-year period, but that provision was repealed decades ago.

Edited June 7, 2012 by gosu

[MightyMouse 12]

I purchased 600,000 shares of a company around the 0.08 cent range in march 2011. I sold 600,000 shares in late november 2011 for a $300,000.00 profit. In the 1st week of december I reinvested in the same stock at a $1.00 stock price leaving me with 300,000 shares I have held my position through 2012 and no the stock sits at the .25 cent range. will I be taxed on original $300,000.00

 

I have a tax extension until october 16th 2012

 

It seems to me like you are new to stocks since you are unfamiliar with the tax ramifications and got lucky on a crazy trade. If it wasn't insider trading, then you had a big set plopping down almost 50k on a penny stock. If you are unaware of how those stocks trade, you might want to find out. Typically they pop and then fall from grace. So, your 25 cents might seem like a high price soon.

[hogtrader 10]

You are taxed on the $300,000 for 2011. It is unclear what you mean by "wash and a loss." According to your facts, you have no loss for 2011 and therefore do not have a wash sale under section 1091. Currently you have an unrealized loss in the stock you are holding.

 

Your situation is such that you may end up paying tax on a gain that might be overstated in light of a later trade. Unfortunately, the trades were in different tax years and so their results cannot be combined. There was a time when individual taxpayers could average incomes over a 3-year period, but that provision was repealed decades ago.

 

 

I made 3 trades in 2011 the 1st round trip and then bought back in to same stock within 2 weeks..