Ha, I always wondered what HFT tax returns looked like.
Of course, the IRS cannot and will not check every transaction. But I do wonder if they actually verify some subset of the reported transactions, or would this only happen in an audit?
Luckily, never had to go through an audit yet. But spot checking a subset of transactions isn’t actually workable. Because of the wash sale rule, the adjusted basis on any single transaction is path dependent on both the previous and future trades in that symbol.
Of course, the IRS cannot and will not check every transaction. But I do wonder if they actually verify some subset of the reported transactions, or would this only happen in an audit?