Wash Sale

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Related to Wash Sales: wash trade

Wash Sale

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.

References in periodicals archive ?
As for the investigation of the wash sales, the Bangko Sentral ng Pilipinas (BSP) and the Securities and Exchange Commission (SEC) have the jurisdiction to investigate, Barte noted.
Nijenhuis believes that "such transactions generally should not be treated as wash sales, even if there are some underlying stocks held by both funds." (227) This opinion appears consistent with the limited case law (228) on this issue for mutual funds, which "preclude[s] looking through the stock of the mutual fund to the underlying assets." (229) By refusing to look at the similarity in the underlying securities, Ms.
The Securities and Exchange Surveillance Commission (SESC) has questioned Goro Tatsumi, president of the Osaka Securities Exchange (OSE), on suspicion the exchange conducted wash sales via a now-disbanded affiliate, sources familiar with the case said Thursday.
The wash sales trap potentially applies to any disqualifying disposition in which an employee, within 30 days--before or after the stock sale--repurchases company shares.
A wash sale results in the disallowance of a loss incurred from the sale of a security if a substantially identical security is acquired within a 61 -day period beginning 30 days before the sale and ending 30 days after the sale.
Because of automatic reinvestment, it is possible that a sale of fund shares at a loss can result in an unintended wash sale.
Wash sales are prohibited by banking and securities regulations because they distort financial markets by misleading third parties as to the volume and price of the securities being traded, when in fact, no real change in ownership of the securities occurs at the end of the day.
Wash sales. A common problem for many short-term traders is the Sec.
According to Badilla, the DBP could have turned over to the government more than P5 billion in earnings this year had it not been for the losses it suffered from the wash sales.
Wash sales are illegal because they distort open market dynamics, artificially increasing the trading volume of the transacted securities even when there is no real change in beneficial ownership at the end of the day.
There are several ways to avoid a wash sale. One is to immediately invest in something different from the security you sold.
In order to avoid a so-called "wash sale," Doug has a few options.