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Wash Sale Rule

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The wash sale rule is an IRS rule that prohibits investors from claiming a tax loss on the sale of an investment if the same investment was purchased within 30 days before or after the original investment's sale date. Investors should note that this 60 day period is calender days, not trading days. This period is referred to as the wash sale rule period. The intent of the wash sale rule is to discourage investors from selling at a loss simply to gain a tax benefit. The wash sale rule is also known as the 30 day wash sale rule. The wash sale rule may apply even if actual stock is not acquired. If the investor enters into a contract or an option to acquire stock, the terms of the wash sale rule are applicable.



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