Q POST PF 387: T_WASH

Is Q referring to the term "tax washing" ? It's a part of the tax code. That term is a "slang term" or insider term for what's called in the textbook terms a wash sale. Pics related.

"A wash sale is a sale of a security (stocks, bonds, options) at a loss and repurchase of the same or substantially identical security shortly before or after.[1] Wash sale regulations protect against an investor who holds an unrealized loss and wishes to make it claimable as a tax deduction within the current tax year. The security is then repurchased in the hope that it will recover its previous value, which would only become taxable in some future tax year. A wash sale can take place at any time during the year."

In the USA wash sale laws are codified in "26 USC § 1091 - Loss from wash sales of stock or securities." The corresponding treasury regulations are given by CFR 1.1091-1 and 1.1091-2.

Under Section 1091, a wash sale occurs when a taxpayer sells or trades stock or securities at a loss, and within 30 days before or after the sale:

Buys substantially identical stock or securities,

Acquires substantially identical stock or securities in a fully taxable trade,

Acquires a contract or option to buy substantially identical stock or securities, or

Acquires substantially identical stock for an individual retirement account (IRA).

The "substantially identical stock" acquired in any of these ways is called the "replacement stock" for that original position.

https://en.wikipedia.org/wiki/Wash_sale

https://www.investopedia.com/terms/w/washsalerule.asp

https://www.marketwatch.com/story/understanding-the-wash-sale-rules-2015-03-02

https://www.schwab.com/resource-center/insights/content/a-primer-on-wash-sales