- posted 6 years ago
Ok here is my situation, I traded stocks for 2 years and I was mostly unaware of how these differed in terms of tax then straddle trades but i'm coming to realize that I'm in big trouble. i'm a kid who thought he had a good idea and here is what happened. I traded butterfly spreads for credit spreads so for example I bought 40 calls sold 80 of the next higher strike and then bought 40 more calls at the next higher strike netting me 50 bucks or so. I sometimes would make a little more on the trades after the fact but my gains in 2011 were about 20k and i lost about 10k in 2012. but in the trades would be huge amounts. For example i would buy 1m worth of the 40 then sell 2m worth of the 80 calls and then by another million of the 40 calls. so if they all expired worthless i would have 2m of losses and 2m of gains. well i had wash sales in january and well from what I gather because of these wash sales I owe somewhere north of 1m dollars in tax. I make 30k a year and really have no assets at all, and I don't even have money to pay a lawyer to try and help me straighten this out. What am I supposed to do? this doesn't seem right. I was never trying to evade taxes by selling stock to lock in losses. i never had access to any of the money i supposedly owe, and I never made or probably will never make enough in my lifetime to pay these taxes. any advice out there?
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