What counts as a wash sale?

Asked 4 years ago

Would it be considered a wash sale if I sell some of my stocks and rebuy before 30 days are up? If my money was limited, and I had a stock that dropped at a fast pace, leaving me at a point where selling meant a loss, but waiting could have nice results. What if I were to sell some of it and rebuy later? Would it change the game at all?

Wash sale Trading strategies Saveti za trgovanje

Simon Mugo

Tuesday, April 13, 2021

Selling some of your stocks and rebuying them before 30 days are up counts as a wash sale. The wash sale rule covers the 30 day period before and the 30 day period after either buying or selling a stock or option.
However, transactions where you sell shares of one company and use the proceeds to buy shares of a different unrelated company within the 30 day period typically do not count as a wash sale. 
The IRS created this rule to prevent investors from booking artificial losses by selling shares at a loss to rebuy it shortly afterwards and report a deductible loss on their tax returns.
If you are still interested in owning the shares you just sold, you could buy an ETF or a mutual fund that holds the stock you just sold as you wait for the 30-day period to end so that you can rebuy the stock.
The wash sale rule also extends to spouses or other legal entities linked to you, such as a company or a trust that purchases shares in a company, after you sold them for a loss and reported it as a deductible to the IRS.
You should consult a qualified financial adviser for advice on your specific situation. 