Tax Concepts

Wash Sale

A wash sale happens when a loss sale is followed by a substantially identical purchase inside the wash sale window, causing the loss to be disallowed for now.

Quick answer

A wash sale happens when a loss sale is followed by a substantially identical purchase inside the wash sale window, causing the loss to be disallowed for now.

It matters because investors may think a loss is available when it has actually been deferred.

Selling stock at a loss and buying back the same stock shortly after can trigger wash sale treatment.

Free CPA Match

Need help applying this to your situation?

Answer a few quick questions and we will help you find CPA options that fit your location and needs.

Plain-English Definition

What Wash Sale means

A wash sale happens when a loss sale is followed by a substantially identical purchase inside the wash sale window, causing the loss to be disallowed for now.

Why it matters It matters because investors may think a loss is available when it has actually been deferred.
Simple example Selling stock at a loss and buying back the same stock shortly after can trigger wash sale treatment.
Related Questions

Questions people ask about Wash Sale

What does Wash Sale mean?

A wash sale happens when a loss sale is followed by a substantially identical purchase inside the wash sale window, causing the loss to be disallowed for now.

Why does Wash Sale matter?

It matters because investors may think a loss is available when it has actually been deferred.

What is a simple example of Wash Sale?

Selling stock at a loss and buying back the same stock shortly after can trigger wash sale treatment.

When should I ask a CPA about Wash Sale?

Ask a CPA when the term affects your tax bill, estimated payments, deductions, or a planning move before year end.

How is Wash Sale different from Cost Basis?

Wash Sale means A wash sale happens when a loss sale is followed by a substantially identical purchase inside the wash sale window, causing the loss to be disallowed for now. Cost Basis means Cost basis is the starting value used to measure gain or loss when property, investments, or business assets are sold or disposed of. The difference is that they apply to different tax, accounting, or business situations and should not be treated as interchangeable.

Free CPA Match

Get matched with a CPA near you

Answer a few quick questions and compare CPA options that fit your location and needs.