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.

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 ?
The wash sale rule does not apply to Bitcoin investments and investments in other types of digital currency because the it only applies to sales of stock and securities.
(49) Commonly known as the "Wash Sale Rule," [section] 1091 prevents an individual investor (50) from deducting any loss that was sustained from the sale of a stock or other security if the investor purchases "substantially identical stock or securities" (51) within thirty days before or after the date of the sale.
Avoiding the wash sale rule, The wash sale rule disallows a capital loss on the sale of shares to the extent the investor buys--or enters into a contract or option to acquire--substantially identical stock or securities within 30 days before or after the day the investor makes the sale or transfer that produces the loss.
The wash sale rules apply to all classes of taxpayers, including corporations.
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.
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.
This new tool will enable investment managers to find out which previously sold securities, if replaced through a purchase transaction, would result in a wash sale.
An opposite and less desirable result that might occur because of a wash sale is the conversion of a short-term capital loss into a long-term capital loss.
Leonard Wright answers a consumer's question about wash sale rules in an article posted Dee.
Also, the trader does not have to comply with the "wash sale" rules (which generally apply to prevent loss deductions on "substantially identical" securities bought within 30 days before or after a sale).
The wash sale rule is grounded in the notion that losses should not be deductible in instances where, due to a prompt reacquisition of substantially, identical property, the taxpayer has not sufficiently altered his or her economic position.
Employees of the Development Bank of the Philippines (DBP) on Friday filed a graft complaint in the Office of the Ombudsman against 14 senior executives of the state-owned bank for allegedly shortchanging the government in the wash sale of P14.3-billion worth of treasury notes last year.