Which of the following BEST describes a wash sale?

By Investopedia Staff AAA
A:

A. Buying and selling the same security simultaneously

B.
Buying stock while selling the equivalent convertible bonds

C. Exercising an option at-the-money

D.Selling securities to take a loss for tax purposes, then buying them back

Correct Answer: D

"A" and "B" are examples of arbitrage; "C" is just an unproductive transaction.




RELATED FAQS

  1. Can you calculate the marginal tax rate in Excel?

    Learn how to approximate taxes owed and if Excel and marginal tax rate data provide an accurate number for personal tax calculation.
  2. What are the most common deferred tax assets used by individuals?

    Use these deferred tax assets to reduce your tax liability and grow your assets simultaneously. Discover the most common ...
  3. Should I use a deferred tax asset for all of my retirement funds?

    Look outside tax-deferred accounts for retirement savings that are worthwhile now and later. Invest a portion in after-tax ...
  4. How is a deferred tax asset taxed?

    Find out how the IRS and FASB treat deferred tax assets, which a company can recognize in order to reduce its future tax ...
RELATED TERMS
  1. Quid Pro Quo Contribution

    A charitable donation for which the donor receives something ...
  2. Readvanceable Mortgage

    A mortgage feature that allows the borrower to re-borrow the ...
  3. Tax Arbitrage

    The practice of profiting from differences between the way transactions ...
  4. Tax Planning

    Logical analysis of a financial situation or plan from a tax ...
  5. Underwithholding

    Inadequate withholding of taxes from wages or other income during ...
  6. Telefile

    A tax service provided nationally by the IRS from 1997-2005 that ...

You May Also Like

Related Articles
  1. Professionals

    'Tis The Season For Tax-Loss Harvesting

  2. Bonds & Fixed Income

    Top 2014 Muni Bond ETFs

Trading Center