Wash sale

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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.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

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.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

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.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.

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.
Copyright © 2008 H&R Block. All Rights Reserved. Reproduced with permission from H&R Block Glossary
References in periodicals archive ?
(47.) The "purpose of the wash sales provisions is to prevent tax manipulation by a taxpayer who attempts to recognize a loss on the sale of 'securities' while maintaining an identical or nearly identical investment position." I.R.S.
Thus, for a case involving the Wash Sale Rule for Treasury bills and Treasury bill futures, like call options and equity ownership in the underlying stock, investors could "avoid the purpose of the wash sales provisions if they can recognize a loss on their 'wash sales,'" realized by selling the Treasury bill or closing out the future contract and maintaining their position in the alternative investment.
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.
When a loss from a wash sale is disallowed, the deferred loss is added to the basis of the newly purchased securities.
A wash sale is the sale (disposition) of a security at a loss and the acquisition of a substantially identical security within a period beginning 30 days before and ending 30 days after the date of sale.
Buenaventura outlined a string of recommendations to prevent a repeat of the wash sales, including requiring all of DBP's trust and treasury traders to reaffirm their fealty and observance of all known securities laws with full support of the board and senior management.
They said the officials of these two DBP units, who were involved in the wash sales, do not have professional licenses and lack the qualification, competency and work experience mandated by law.
Some banks try to go around the restriction by using a process-also prohibited by regulators-known as a wash sale wherein the securities are sold to another financial institution and bought back at a pre-agreed price, usually on the same day or shortly thereafter, to make auditors believe that these are new purchases rather than merely transfers meant to make their books look better.
The important thing is that Lynn can invest the way she pleases, as long as she doesn't enter into a wash sale. By staying invested, she will be in a position to use her capital losses in a future market recovery.
As long as the second fund does not hold the same bonds as the first fund, Doug won't have a wash sale.
The so-called "wash sale" rules prevent this tactic.
* The wash sale rules prevent you from taking a capital loss if you immediately repurchase the asset you sold.