Wash Sales

What this video covers

• Why the wash sale window is 61 days (30 before, the sale date, and 30 after), not 30
• The two conditions that must both be met to trigger the rule: a sale at a loss and a repurchase of a substantially identical security inside the window
• Which replacement purchases count as substantially identical, including call options and same-issuer convertible bonds, and which do not (same-industry stocks, most mutual funds)
• How the disallowed loss is added to the replacement shares' cost basis in a taxable account, and how the holding period tacks on
• The exact cost basis math when a $500 disallowed loss is added to a $4,000 repurchase, and how that reduces the eventual taxable gain
• Why a wash sale triggered by a repurchase in an IRA or Roth IRA permanently disallows the loss instead of deferring it
• Why the rule applies across all accounts the taxpayer controls, including a spouse's accounts and retirement accounts