The date for determining when a gain is recognized is the date the deal closed, so if a deal closed Dec. 31, taxable profits are income for 1999. Wertheim recalled a startled and unhappy client with a large gain on a takeover deal. The client thought, since he didn't get the money until January, that it would be included in his 2000 income. Day traders also should be aware of the wash-sale rules if they have a number of buy and sell transactions in the same stock. Losses are not deductible if you sold a security and within 30 days before or after that date bought the same stock.
Gains are taxable, however.
Another hazard is the creeping alternative minimum tax. The AMT was originally aimed at the rich, to make sure they paid at least some tax. Finally, there's the problem of too much prosperity. Several experts said they expect a number of taxpayers will be in for a shock when they add up mutual fund distributions and other stock market profits. While refunds are running higher than last year at the moment, people in this situation may well get a smaller refund than they expected or none at all.