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. Investopedia Says:
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 within 30 days of sale (before or after sale). Related Terms:
Accommodation Trading
Crystallization
Daisy Chain
Paper Profit (or Loss)
Tax Selling
Wash
Wash Sale Rule |