Day trading and FIFO-Wash Sale-LIFO

[blaster]

Question for the pros:

Most brokers offer FIFO First in First Out by default. Lets say:
***
January 1st 2008 (LOT A)
Bought 1000 shares of ABC @ 8/share = 8000
***

March 1st 2008 (LOT B)
Bought 300 more shares of same ABC @ 5/Share = 1500
Sold 300 share of same ABC @ 2/Share = 600
To most people this should be a loss selling LOT B 1500-600 = 900

But in reality cause of the FIFO rule this will be sell of 300 shares from LOT A above and will be a loss of 2400 - 600 = 1800
Even though the trade was made roughly after 90 days of the purchase of LOT A this for some reason still results in a Wash Sale. Why???

Is there any other way that one can avoid and sell the LOT that they wana sell? I have heard one can call the broker and mention which LOT to sell. Switch to LIFO?

I would also like to know how day traders make 30 or more trades a day and take into account the ORIGINAL (LOT A) position and top of that all subsequent trades whether profit or loss base? (as described in scenario above)

Please provide some guidance in layman terms :dong: Thanks a bunch.

[aiki14]

Question for the pros:

Most brokers offer FIFO First in First Out by default. Lets say:
***
January 1st 2008 (LOT A)
Bought 1000 shares of ABC @ 8/share = 8000
***

March 1st 2008 (LOT B)
Bought 300 more shares of same ABC @ 5/Share = 1500
Sold 300 share of same ABC @ 2/Share = 600
To most people this should be a loss selling LOT B 1500-600 = 900

But in reality cause of the FIFO rule this will be sell of 300 shares from LOT A above and will be a loss of 2400 - 600 = 1800
Even though the trade was made roughly after 90 days of the purchase of LOT A this for some reason still results in a Wash Sale. Why???

Is there any other way that one can avoid and sell the LOT that they wana sell? I have heard one can call the broker and mention which LOT to sell. Switch to LIFO?

I would also like to know how day traders make 30 or more trades a day and take into account the ORIGINAL (LOT A) position and top of that all subsequent trades whether profit or loss base? (as described in scenario above)

Please provide some guidance in layman terms :dong: Thanks a bunch.

This is why I have a tax attorney.
I believe since you bought and sold essentially the same stock on 1 march you get hit with a wash sale no matter what.

[LongArm]

Yup, it's a wash sale because the 300 B lot shares you bought are considered replacement shares, even though you bought them BEFORE your 300 share sell If you buy replacement shares within 30 days, before OR after, selling for a loss, it's a wash sale.

What I do to avoid wash sale hassles is to only trade stocks in December that I haven't traded throughout the year (and then get out of THOSE by December 31st). This ensures that I'm out of any stocks that I may have had wash sales in for at least 31 days, which wipes the wash sale slate clean for the year. No muss, no fuss.

Oh, and to answer your other question, yes, you can designate which lot you want to sell by calling your broker, or depending on the brokerage, you may be able to do this via the website/trading platform.

[LongArm]

Yup, it's a wash sale because the 300 B lot shares you bought are considered replacement shares, even though you bought them BEFORE your 300 share sell (PERIOD GOES HERE) If you buy replacement shares within 30 days, before OR after, selling for a loss, it's a wash sale.
Sorry, that should be two sentences, not one.

[blaster]

Thanks a bunch Longarm and Aiki for the replies.