Wash Sale
Wash Sale means:
a sale or other disposition of stock or securities at a loss accompanied by a purchase of substantially identical stock or securities during a period beginning 30 days before the date of sale or other disposition and ending 30 days after that date-a total of 61 days. The taxpayer is denied a tax deduction for any loss incurred on a wash sale. If the disposition during the 61-day period is at a gain, it is not a wash sale, and the gain will be taxable. This rule does not apply to individuals who are traders or dealers in securities or to corporations that are dealers in securities if the sale or other disposition is made in the ordinary course of their businesses. When a loss is disallowed because of its being a wash sale, the basis of the substantially identical stock or securities acquired during the 6l-day period is the cost thereof plus the amount of the loss disallowed. Former IRC (check if this IRC provision is current here) §1091.
Description and Definition of Wash Sale
The sale and repurchase of securities within 30 days. Sales on which losses are disallowed because you recover your market position within a 61-day period. If you sell stock at a loss and purchase substantially identical stock within 30 days before or after the sale you cannot claim the loss for tax purposes. The law forbids the deduction of the loss.
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