Wash sale

(redirected from Wash Sales)
Also found in: Dictionary, Legal.
Related to Wash Sales: wash trade

Wash sale

Purchase and sale of a security either simultaneously or within a short period of time, often in order to recognize a tax loss without altering one's position. See: Tax selling.

Wash Sale

1. An illegal act in which an investor buys and sells the same security at the exact same time, especially through two different brokerages. This results in neither profit nor loss for the investor, but creates the impression that the security is undergoing heavy trading, which could drive up the price or generate unwarranted interest.

2. An illegal act in which an investor takes essentially the same position as one he/she closed at a loss less than 30 days earlier. Wash sales are intended to provide the investor with a write-off (through the loss) without fundamentally changing the position he/she holds.

wash sale

The illegal purchase or repurchase of an asset within 30 days of the sale date of a basically identical asset that was sold in order to take a tax loss. For example, if an investor sold a security at a loss and then immediately repurchased the same security or a basically identical security, the Internal Revenue Service would consider the transaction a wash sale.

Wash sale.

When you purchase and then sell or sell and then repurchase the same security or a substantially similar security within 30 days, the double transaction is called a wash sale.

As an individual investor, you can't use any capital losses that the sale produces to offset capital gains from selling other securities in your portfolio.

For example, if you sold 200 shares of an underperforming stock on December 15 intending to use the loss on that sale to offset gains on other sales, your offset would be invalid if you repurchased the stock before the following January 15. But if you repurchased on January 16, the offset would be valid. In fact, avoiding wash sales is an important part of tax planning.

In a broader use of the term, purchasing and then quickly reselling a security may be described as a wash sale, whether the transaction is part of an innocent trading strategy or a pump-and-dump scheme.

Wash Sale

The purchase of substantially similar stock or other securities within 30 days before or after the sale of the similar stock or security at a loss. A taxpayer cannot claim a wash sale loss; instead, the loss is added to the basis of the most recently purchased substantially similar securities.
References in periodicals archive ?
If the company is aware of the wash sale and seeks a compensation expense deduction, it will feel obligated to report W-2 income to the employee to secure its deduction [Reg.
If you are one of the increasing number of active traders with potential wash sales in your portfolio, visit with your accountant about techniques you can use to recognize these losses and lower your tax bill.
a member of Western & Southern Financial Group(R), has adopted GainsKeeper(R) FundTax(TM), an automated tax lot service, to automate wash sale calculations for select mutual fund clients.
They can also turn to software that automatically adjusts for wash sales and corporate actions, and helps identify the most efficient tax lots to sell.
Short sales are subject to special tax rules that affect holding period and short-term/long-term gain/loss determinations and special wash sale rules.
TradeLog is a simple to use program that fills this critical year end tax accounting need, while also providing the ability to import a proper accounting of capital gains and wash sale adjustments into most popular tax software programs.
TradeLog(TM) boasts the most sophisticated trade matching, capital gains, and wash sale computations of any software on the market.
iTELS' new feature evaluates and records the impact of wash sales on portfolio lot-level records.
In addition, PFPC officials said a significant enhancement now makes the automated wash sales processing system fully equipped to process wash sales for debt instruments.
It provides you with in-depth data regarding site numbers, market shares, fuel sales, shop and car wash sales, all at the touch of a button.
Investors really need to think ahead when it comes to avoiding wash sales," said Routh.