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Wash Sale |
Also found in: Dictionary/thesaurus, Financial, Wikipedia | 0.03 sec. |
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The buying and selling of the same or a similar asset within a short period of time. A fictitious type of arrangement whereby a Broker, upon receiving an order from one individual to purchase and an order from another individual to sell a certain amount of a particular stock or commodity, transfers it from one principal to the other and retains the difference in value. For the purposes of Income Tax, losses on a wash sale of stock may not be recognized as capital losses if stock of equal value is obtained within thirty days prior or subsequent to the date of sale. Various stock exchanges disallow this practice because the orders to buy and sell should be executed separately to the advantage of each of the broker's clients. How to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit webmaster's page for free fun content. |
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| The wash sale rules do not apply to dealers in stock and securities if the loss was incurred in the ordinary course of such business. It also includes guidance on how to convert paper losses into realized capital losses without triggering the wash sale rule and how to use the charitable contribution provisions to mitigate the current market's negative effects. If a wash sale is triggered, it would be doubtful that the taxpayer will qualify for a post-2000 acquisition date, because the holding period reverts to the original pre-2001 holding period. |
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