What counts as a wash sale?

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.