Wash Sale

What Does Wash Sale Mean?
An illegal transaction an investor makes by simultaneously buying and selling a security through two different brokers, thereby creating the illusion of activity. Investors do this to try and recognize a tax loss without actually changing their position.

Investopedia explains Wash Sale
The effectiveness of this strategy has been greatly diminished with the implementation of the IRS 30-day wash rule, where a taxpayer cannot recognize a loss on an investment if that investment was purchased within 30 days of sale (before or after sale).

Related Terms

Accommodation Trading
Crystallization
Daisy Chain
Paper Profit (or Loss)
Tax Selling
Wash
Wash Sale Rule
More Related Terms

Related Links

Selling Losing Securities For A Tax Advantage - Tax-loss harvesting can help you to reduce taxes on your portfolio gains, but make sure you know the rules!

Get a new investing term in your inbox each day!

- join our Term of the Day!