How does the wash sale rule work in this situation?
The way the wash sale works is your loss is added to your cost basis of the buy.  So suppose your original cost basis is $10,000.  You then sell the stock for $9,000 which accounts for your $1,000 loss.  You then buy the stock again, say for $8,500,  and sell it for $9,000.  Since your loss of $1,000 is added to your cost basis, you actually still have a net loss of $500. You then buy the stock again for say $10,500,  then sell it for $9,500.  Your $500 loss is added to your cost basis,  and you have a net loss of $1,500. Since you never had a net gain, you will not owe any tax for these transactions.
I've done this in AZ. It's important to know which lender is foreclosing, because if it's not the most senior one, then your purchase can later be foreclosed. A foreclosure extinguishes all junior interests, but can itself be extinguished by a more senior interest. I may not have the correct terms here but you get the idea. You should also check to be sure property taxes are current. They are probably being paid by the original lender, but it wouldn't hurt to check. Make sure you understand the requirements for participation in the auction. In my case they required that I bring a $10K cashier's check made out to myself. On winning the auction I endorsed the check over to the auction company and had 24hours to come up with the remaining funds in cash. The property I bought had been previously sold at a Sheriff's sale to satisfy a judgment in favor of the Homeowner's Association for delinquent dues. The HOA bought the property at the auction and received a Sheriff's deed. At this point the original owner's possessory interest in the property was extinguished. Nevertheless, the original mortgage and deed of trust were still in place, being senior to the HOA's interest. About a year later the lender foreclosed on the property and I bought it at auction at the courthouse. This had the effect of extinguishing the HOA's interest, a fact that took some explaining to the water utility to get the account in my name :-) Not really. The lender is not buying the stock back at a lower price. Remember, he already owns it, so he need not buy it again. The person losing is the one from whom the short seller buys back the stock, provided that person bought the stock at higher price.  So if B borrowed from A(lender) and sold it to C, and later B purchased it back from C at a lower price, then B made profit, C made loss and A made nothing . I think you're missing the fact that the trader bought the $40 call but wrote the $45 call -- i.e. someone else bought the $45 call from him.  That's why you have to subtract 600-100.  At expiration, the following happens: So $600 + -$100 = $500 total profit. Note: In reality he would probably use the shares he gets from the first call to satisfy the shares he owes on the second call, so the math is even simpler: Is this legal?  If the purpose of the sale at that price is to defraud somebody else, you could have a legal issue. For example if the purpose was to make yourself appear poorer to make you eligible for government aid; Or to increase your chances of getting a college grant; or to not have to pay money to your spouse as part of a divorce settlement; or if there is an unwritten part of the transaction for the sibling to sell the house back to in a few years when you no longer need to appear poor.  The answer by @littleadv covers the tax complications.  I do have one additional point. The sale can't be a short sale. The bank will never approve. The short sale can only be approved when the bank is convinced that there are no viable purchasers at a level to get all their money back. Your sibling is not an arms length transaction. Honestly, 10 wash trades is next to nothing.  I run a small automated trading firm and I get maybe 20-30 wash trades per quarter.  You get fined for them but it's not a big deal, preventing wash trades can be pretty hard and sometimes it's entirely out of your control.  Canada has much stricter rules about wash trading, the U.S. has more lenient rules on them, and in Europe you can wash trade all you want because honestly it doesn't make much of a difference.  Anyhow, just trying to give some perspective that 10 instances of wash trading is not unusual/uncommon, won't have any market impact one way or another, and often happens by accident.  If anything wash trades are just a pain in the ass, you end up paying transaction costs for nothing. I think the best answer that doesn't make the buyer look like a moron is this. Buyer had previously sold a covered call.  They wanted to act on a different opportunity so they did a closing buy/write with a spread of a couple cents below asking for the stock, but it dipped a couple cents and the purchase of those options to close resolved at 4 cents due to lack of sellers. "There is a legal document called a ""Stock Purchase Agreement"" and it depends on who is the other party to the buyer in the Agreement. In almost all startups the sale goes through the company, so the company keeps the money. In your example, the company would be worth $10,000 ""Post-Money"" because the $1k got 10% of the Company." Firstly 795 is not even. Secondly - generally you would pay tax on the sale of the 122 shares, whether you buy them back or not, even one minute later, has nothing to do with it. The only reason this would not create a capital gains event is if your country (which you haven't specified) has some odd rules or laws about this that I, and most others, have never heard of before. I have heard of this, but then the broker is short the shares if they weren't selling them out of inventory, so they still want to accumulate the shares or a hedge before EOD most likely - In that case it may not be the client themselves, but that demand is hitting the market at some point if there isn't sufficient selling volume.    Whether or not the broker ends up getting all of them below VWAP is a cost of marketing for them, how they expect to reliably get real size below vwap is my question. "It's impossibly difficult to time the market. Generally speaking, you should buy low and sell high. Picking 25% as an arbitrary ceiling on your gains seems incorrect to me because sometimes you'll want to hold a stock for longer or sell it sooner, and those decisions should be based on your research (or if you need the money), not an arbitrary number. To answer your questions: If the reasons you still bought a stock in the first place are still valid, then you should hold and/or buy more. If something has changed and you can't find a reason to buy more, then consider selling. Keep in mind you'll pay capital gains taxes on anything you sell that is not in a tax-deferred (e.g. retirement) account. No, it does not make sense to do a wash sale where you sell and buy the same stock. Capital gains taxes are one reason. I'm not sure why you would ever want to do this -- what reasons were you considering? You can always sell just some of the shares. See above (and link) regarding wash sales. Buying more of a stock you already own is called ""dollar cost averaging"". It's an effective method when the reasons are right. DCA minimizes variance due to buying or selling a large amount of shares at an arbitrary single-day price and instead spreads the cost or sale basis out over time. All that said, there's nothing wrong with locking in a gain by selling all or some shares of a winner. Buy low, sell high!" Is this possible and will it have the intended effect? From the US tax perspective, it most definitely is and will. Is my plan not very similar to Wash Sale? Yes, except that wash sale rules apply for losses, not gains. In any case, since you're not a US tax resident, the US wash sale rules won't apply to you. Purchases and sales from the same trade date will both settle on the same settlement date. They don't have to pay for their purchases until later either. Because HFT typically make many offsetting trades -- buying, selling, buying, selling, buying, selling, etc -- when the purchases and sales settle, the amount they pay for their purchases will roughly cancel with the amount they receive for their sales (the difference being their profit or loss). Margin accounts and just having extra cash around can increase their ability to have trades that do not perfectly offset. In practice, the HFT's broker will take a smaller amount of cash (e.g. $1 million) as a deposit of capital, and will then allow the HFT to trade a larger amount of stock value long or short (e.g. $10 million, for 10:1 leverage). That $1 million needs to be enough to cover the net profit/loss when the trades settle, and the broker will monitor this to ensure that deposit will be enough. Note that the rules around wash sales vary depending on where you live. For the U.S., the wash sale rules say that you cannot buy a substantially identical stock or security within 30 days (before or after) your sale. So, you could sell your stock today to lock in the capital losses. However, you would then have to wait at least 30 days before purchasing it back. If you bought it back within 30 days, you would disqualify the capital loss event. The risk, of course, is that the stock's price goes up substantially while you are waiting for the wash sale period. It's up to you to determine if the risk outweighs the benefit of locking in your capital losses. Note that this applies regardless of whether you sell SOME or ALL of the stock. Or indeed, if we are talking about securities other than stocks. What happened here is pretty obvious: You were trying to sell 2000 shares and apparently didn't mark your order to permit partial execution.  While they had a buyer at 94.66 they didn't want 2000 shares.  Thus your order went unfilled. Unfortunately, it's a simple 'no'. Once the IRS has your money, you need to wait until early next year to settle up. He can increase his allowances via form W4, and have less money withheld from pay checks the rest of this year, but no chance for a lump sum return before tax time.  For sake of a comprehensive answer, early withdrawals are subject to a 10% penalty along with regular income tax. It sounds like the son is in the 15% bracket, and a total 25% would have been the right number to choose.