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. What's the difference between a financial advisor and a financial planner?

    Seeking professional advice from a financial advisor may involve asking for financial help from a certified financial planner, ...
  2. What credit card fees are tax deductible?

    Learn about some of the unexpected tax deductions for fees incurred through credit card purchases for both individuals and ...
  3. Must I pay Social Security taxes on my earnings after full retirement age?

    Paying Social Security contributions continues even past reaching full retirement age, but that can increase future Social ...
  4. How much will it cost to hire an accountant to do my taxes?

    Find out how much it costs to hire an accountant and what benefits and services you can expect from your accountant.
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 ...
Related Articles
  1. A new Supreme Court ruling has some financial advisors rushing to set up trusts to help protect inherited IRAs. Is that necessary?
    Investing Basics

    How Advisors Can Protect Inherited IRAs

  2. The Internal Revenue Service's new 2015 contribution limits for tax-deferred savings plans are higher; here's what you and your clients should know.
    Investing Basics

    New 2015 Contribution Limits: Advisors ...

  3. Don’t waste your time wading through the slew of private and corporate tax websites out there. Go straight to the source: IRS.gov.
    Taxes

    The Most Helpful Tools On The IRS.gov ...

  4. Even the most enlightened citizen curses taxes, possibly while simultaneously acknowledging that they're the price of a civilized society.
    Taxes

    How The IRS Works: Functions & Audits

  5. Professionals

    5 Services To Usher In New Clients

Trading Center