The Unintended Consequences of DIY Investing

A new day trader discovered he owes $800,000 in taxes on a net profit of only $45,000. The trader contacted Brad, a financial advisor, for help. Brad wondered if the tax preparation software used by the trader was calculating the taxes correctly. Brad 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.