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The wash-sale rule applies to stocks, bonds, mutual funds, ETFs, options and futures but not yet to cryptocurrency. While it is not illegal to make a wash sale, it is illegal to claim a tax write ...
A wash sale is a sale of a security (stocks, bonds, options) at a loss and repurchase of the same or substantially identical security (judging by CUSIP or Committee on Uniform Securities Identification Procedures numbers) shortly before or after. [1]
Continue reading ->The post What Investors Should Know About the Wash-Sale Rule appeared first on SmartAsset Blog. When an investment underperforms, tax-loss harvesting is a way to offset the tax ...
Immediately replacing an actively managed fund with an index fund or ETF would be fine, for example. But swapping an index fund for an ETF that tracks that same index would run afoul of the wash-sale rule, in that they’re substantially identical securities. In that instance, the IRS would disallow the loss.
Most simply, if "tax-loss harvesting is not done properly, it will create a wash-sale that will eliminate the tax benefits of the buying and selling". [9] The investor can employ a number of techniques to avoid triggering the wash sale rule. The investor can wait 30 days to repurchase the security. [10]
As you’re doing so, however, don’t get tripped up by the wash-sale rule. A wash sale occurs when you sell an asset for a loss but have purchased the same asset within 30 days before or after ...
Special wash sale rules apply if the same or substantially similar asset is bought, acquired, or optioned within 30 days before or after the sale. [4] According to 26 U.S.C. §121, a capital loss on the sale of a primary residence is generally tax-exempt. [citation needed]. IRC 165(c) is a stronger source that limits the loss on the sale of a ...
For example, if you know you'll incur a $5,000 gain on one stock sale this year, you can sell another stock at a $3,000 loss and then only need to pay taxes on the net gain of $2,000.