Wash Sales Overview
OVERVIEW
A “wash sale” is a sale or other disposition of stock or securities, resulting in a loss, in which the seller, within a 61-day period (which begins 30 days before and ends 30 days after the date of such sale or disposition), replaces the stock or securities by acquiring (by way of purchase or exchange on which the full gain or loss is recognized for tax purposes), or entering a contract or option to acquire, substantially identical stock or securities. (IRC Sec. 1091(a); Reg. Sec. 1.1091-1(a))
"Wash sales," defined above, are a strategy by which taxpayers can claim a tax benefit by selling, and subsequently re-purchasing, an asset within a specified period of time. In short, the wash-sale IRS rule allows investors to avoid selling at a loss.