The Hidden Danger of Wash Sales
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Nov 15, 2024
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Tax Consultant
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6 min read
A wash sale occurs when you sell a stock at a loss and buy it back too quickly. The IRS will disallow the tax deduction.
The 30-Day Window
The rule applies to purchases 30 days *before* and 30 days *after* the sale. It's a 61-day total window.
Across All Accounts
The IRS considers your IRA, brokerage, and spouse's accounts as one. You can't sell in your brokerage and buy back in your IRA.
Adjusting Your Basis
If you trigger a wash sale, the loss isn't gone forever; it's added to the cost basis of the new shares you bought.