Investor Glossary-30-day wash ruleInvestor Glossary-30-day wash ruleInvestor Glossary-30-day wash ruleInvestor Glossary-30-day wash ruleInsightful stock market charts - Click here
investor
Categories    # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

30-day Wash Rule

The HTML to link to this page
 

The 30-day wash rule is an IRS rule prohibiting the sale and repurchase of a security sold for purposes of claiming a tax loss within a 30-day period. The 30-day wash rule covers a 60-day window, 30 calendar days before and after the sale. The 30-day wash rule was put in place to keep taxpayers from simultaneously selling and repurchasing a substantially identical security, reaping a tax benefit while exposing them to no risk. In order to claim a tax loss, investors must risk the growth of their depreciated asset while not holding it for a time. The 30-day wash rule ensures taxpayers adhere to this exclusionary period or else their tax loss can be disallowed.

Investors should keep in mind that the security bought does not have to be the exact same as the one sold. According to the 30-day wash rule, if an investor repurchases a "substantially identical security", 30 days before or 30 days after the sale, they are in violation of the 30-day wash rule. The 30-day wash rule is in effect regardless of the sequence of the transactions.

For more information on the 30-day wash rule please see IRS publication 550.



Rate this 30-day wash rule definition...

Learn about investing with the Investor Glossary Term of the Day


Click here for insightful stock market charts. Where is the market headed? The answer may surprise you. Find out
with the exclusive & Barron's recommended charts of Chart of the Day.


Popular Terms: inflation, EBITDA, average price per share, current ratio, FTSE, 1035 exchange, LIBOR, annual return, deferred revenue, option premium, 401a, command economy, open position, real GDP, implied volatility, in escrow, quality assurance, cancelled check, dividends payable, covered put, stock split, 1031 exchange, class C shares, required rate of return, ex-dividend, limit order, risk management, Zero Cost Collar, reverse mortgage, minority interest, VIX, deferred tax, Key Rate Duration, margin rate, wholly-owned subsidiary, APR, 144a, diluted share, stock market close, FICO score, ex-dividend date, phantom income, per diem, debt service coverage, balance sheet, retained earnings, irrevocable trust, labor relations, liquidity ratio


Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
Investor Glossary | Term of the Day | Suggest a Term | Chart of the Day | Dogs of the Dow
©2004-2016 Investor Glossary - All rights reserved - Terms of Use