What is a Wash Cash Sale?

Article ID: 59808  

Question
What is a Wash Cash Sale?

Answer

A wash sale occurs when you sell or otherwise dispose of stock or securities (including a contract or option to acquire or sell stock or securities) at a loss and, within 30 days before or after the sale or disposition, you directly or indirectly:

  • Buy substantially identical stock or securities,
  • Acquire substantially identical stock or securities in a fully taxable trade, or
  • Enter into a contract or option to acquire substantially identical stock or securities.

You cannot deduct losses from wash sales unless the loss was incurred in the ordinary course of your business as a dealer in stock or securities. The basis of the substantially identical property (or contract or option to acquire such property) is its cost increased by the disallowed loss. For more details on wash sales, see Pub. 550.

To classify a transaction as a "Wash Sale" check the box in the capital gains section of your interview.


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Views: 1937 Created on: Jun 15, 2013