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A wash sale occurs when one sells a security for a loss and repurchases the same security within 30 days. Read a detailed overview of wash sale rules here.
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So, you wouldn't want to lose that tax break by falling afoul of an IRS rule governing "wash sales." In short, a wash sale is when you sell a security at a loss for the tax benefits but then turn around and buy the same or a similar security. It doesn't even need to be intentional.
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What is a Wash Sale? The IRS created wash sale rules to prevent investors from forming artificial losses (Publication 550).For example, if you close a position at a loss today to reduce your gains, then reestablish the same position or "substantially identical" position a week later, the loss from the first closing trade will defer and become a wash sale.
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Wash Sale Example . Assume an investor has a $15,000 capital gain from the sale of ABC stock. They fall in the highest tax bracket and must pay a 20% capital gains tax of $3,000.
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