will stop soon, but it is almost April 15....
You can get an automatic extension to August 15 by filling
out a few lines on a half-page form. They ask you to guess
off your expected total tax and how much you have left to pay
but they won't deny the extension unless it looks like you are
playing games. Some claim that filing in the crush of 4/15
reduces audit risk but I don't believe that. I have been
hoping for an audit for years but the bastards have me on
ignore.
>It is true that section 267 of the Code disallows sales between certain related persons, as defined.<
No, the code never limits economic discretion. It is the
tax treatment of the transactions that varies with the
individual circumstances. The IRS does not have the authority
to limit your sovereign power to conduct your own business.
The further remarks you make illustrate what ought vivify
interest in the related persons rule. The loss is not merely
disallowed for the time being, but forever. Violation of
the wash sale rule merely defers the tax benefit of the
writeoff--violation of the related persons rule destroys it.
You don't get the writeoff, and the related person doesn't
get any basis adjustment.
I am not going to dig up cites for you--you notably possess
the wherewithal to do your own digging. I am certain that
my retirement accounts, my wife's retirement accounts, my
taxable accounts, and her's, and our's are ALL related persons
in this regard. Friendly reminder: that one case doesn't
settle an issue of law doesn't mean it isn't settled law.
There was some Chinese guy in NY about ten years ago who tried
to game this hard. He was going on ECNs with way weird bids
and asks submitted at the same time and taking both sides of
the trades so as to shove his gains into the retirement side
and the losses into the taxable side (to the tune off $400+).
He went to jail.
PS technical point for would-be critics: for most tax purposes
if a taxpayer has multiple IRA's with different outfits they
are considered as consolidated sub-accounts, but for the purpose
of applying the related person rule each separate account is
(by virtue of its nature as a trust) is deemed a separate
"person". That is, trusts possess, just as do corporations,
legal personality. So I was being sloppy when I said that
my taxable accounts are "persons"--they are all consolidated
and identified with LRG (unlike my retirement accounts). So
the total number of persons is 1+1+n+m.
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