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Old 01-21-2011, 01:28 PM
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What are the Tax Impact of Wash Sales?

The "Wash Sale" rule prohibits a taxpayer from realizing a loss on a security if that taxpayer buy's the same or a substantially identical security (or option to buy such a security) within 30 days before and/or after the security has been sold.

This rule requires that a taxpayer to be "out of the position and/or at an investment risk" for those 30 days if the taxpayer wishes to realize a loss on the security yet buy it back for future growth.

If the taxpayer fails the wash sale rule, the capital loss will be realized only when the replacement security is sold.

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