What is a wash sale?
A wash sale is a transaction where an investor:
- Sells a stock at a loss
- Then repurchases it again within 30 days.
What is the impact of a wash sale?
The IRS prohibits investors from deducting the losses incurred from a wash sale for tax purposes.
So, the cost basis for the stock is updated to reflect the loss incurred.
To learn more about wash sale rule and its implications read our blog post.