When I upload Form 8949 transactions using TaxAct it rounds the proceeds/basis for each individual transaction to the nearest dollar. In other words if I make one transaction buying a stock for 0.51 and selling it for 0.49, and another buying for 0.51 and selling for 0.53, then TaxAct handles it as:

Proceeds Basis Gain/Loss
Transaction 1 Round(.49)=0 Round(.51)=1
Transaction 2 Round(.53)=1 Round(.51)=1
Total 1 2 -1

Rather than

Proceeds Basis Gain/Loss
Transaction 1 .49 .51
Transaction 2 .53 .51
Total Round(1.02)=1 Round(1.02)=1 0

This is easily exploitable. I can just find a stock trading slightly over $X.50, buy it and sell after it moves a bit. When it moves up I claim a gain of zero and when it moves down I claim a loss of 1. If I do this a million times then on average the real gains and losses will approximately cancel out and I end up with a ~500k tax loss with ~0 real loss (maybe slightly more than 0 if I have to cross a penny wide bid/ask spread, but at any rate a real loss much smaller than the tax savings from a 500k paper loss).

Presumably I didn’t invent a tax glitch, but I am wondering if I'm entering my transactions incorrectly, or TaxAct is handling them incorrectly or something else?

  • The question is, what does your broker report to the IRS? A loss of $500k or a loss of zero? Imagine the fun you'll have with the IRS if the broker reports zero and you claim a $500k loss. Feb 18, 2022 at 19:26
  • Assume it's crypto and there's no 1099-B reported to the IRS.
    – user115749
    Feb 18, 2022 at 21:35

1 Answer 1


The problem with this scheme is that the IRS would treat you as a day-trader and you'll have to aggregate all your transactions on Schedule C instead of form 8949, thus negating the "loophole".

On average, in long term investments, these rounding errors cancel each other. But if you do it at a high-volume short term trading earning pennies per transaction that add up to hundreds of thousands of dollars - that's exactly the definition of a "day-trader".

  • The IRS does not make you aggregate all your transactions on Schedule C if you day trade. Feb 19, 2022 at 15:37
  • @BobBaerker See irs.gov/taxtopics/tc429. "The law considers this to be a business, even though a trader doesn't maintain an inventory and doesn't have customers. ... You must seek to profit from daily market movements in the prices of securities and not from dividends, interest, or capital appreciation; Your activity must be substantial; and You must carry on the activity with continuity and regularity"
    – littleadv
    Feb 19, 2022 at 19:38
  • What's the connection, @littleadv ?? "The law considers this to be a business...." may be right, but it is a non-sequitor to BobBaerker 's comment that you do not have to aggregate on Schedule C.
    – Aganju
    Feb 20, 2022 at 5:59
  • @littleadv - What you are referring to is Tax Trader Status which has very stringent requirements and is a business unlike the everyday guy who day trades just files a Schedule D. As noted in your link, "If the nature of your trading activities doesn't qualify as a business, you're considered an investor and not a trader. It doesn't matter whether you call yourself a trader or a day trader, you're an investor." See this and see this Feb 20, 2022 at 8:28

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