TRUTH 3Wash sale rules

Sometimes stock transactions make you want to wash your hands of all investing. Other times, you’re more philosophic and view gains and losses that “wash each other out” as just part of the process.

But if you try to time a stock sale and repurchase to take a tax loss but hang onto the asset or one similar to it, the IRS will crack down on you for violating its “wash sale rule.”

The rule was created to keep investors from gaming the tax and investment systems. Here’s what the IRS wants to prevent:

You own a stock that you believe will, in the long term, be a good investment. However, at the moment, it has dropped in value so that if you sell it, you can use it as a capital loss against gains or ordinary income. But to ...

Get The Truth About Cutting Your Investment and Retirement Taxes: The Essential Truths in 20 Minutes now with the O’Reilly learning platform.

O’Reilly members experience books, live events, courses curated by job role, and more from O’Reilly and nearly 200 top publishers.