Hello all,
I just learned about the wash sale rule after being corrected by someone about it, and I intend to share this knowledge with you all.
The wash sale rule is: if you sell 100 shares of a security at a loss, say you bought in at $10 and sell at $5, your loss is $500. Congratulations, you can use that to offset your taxes a bit; HOWEVER, if the stock continues to go down or whatever reason you want to buy back in within 30 days of selling at a loss, say you buy 20 shares back, that loss you experienced for those 20 shares is now DISALLOWED by the wash sale rule. You can now only claim losses on the 80 shares you sold that remain. If you wait more than 30 days to buy back in, the wash sale rule does not apply, and you can claim the full loss on your taxes.
If I am wrong someone correct me. If something is unclear, please ask a question.
Thank you for your time and happy Stocks-ing!
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