What are the tax implications of wash sales?

What are the tax implications of wash sales?

Wash sales occur when you sell a security at a loss and repurchase it within 30 days. The IRS disallows the loss for tax purposes.

So, if I sell a stock at a loss and buy it back quickly, I can't deduct that loss?

Correct! The loss is disallowed, and you can't use it to offset gains. However, the disallowed loss is added to the cost basis of the repurchased stock.

What if I wait more than 30 days to buy it back?

If you wait more than 30 days, the sale is no longer considered a wash sale, and you can deduct the loss on your taxes.

Are there any exceptions to this rule?

Yes, there are exceptions, such as if you buy a substantially identical security in a different account or if the sale is part of a larger tax strategy.