| Wash Sale | |
 An illegal transaction an investor makes by simultaneously buying and selling a security through two different brokers, thereby creating the illusion of activity. Investors do this to try and recognize a tax loss without actually changing their position. |
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 The effectiveness of this strategy has been greatly diminished with the implementation of the IRS 30-day wash rule, where a taxpayer cannot recognize a loss on an investment if that investment was purchased withing 30 days of sale (before or after sale). |
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 Tax Code - Wash Sale Rule - Some good info on the wash sale rule by invest-faq.com. Five Tips for the Tax-Smart Investor - Being tax savvy can help you increase your returns more than you'd expect! Selling Losing Securities for a Tax Advantage - Tax-loss harvesting can help you to reduce taxes on your portfolio gains, but make sure you know the rules! |
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