What are the exemptions to the wash sale rule?
An example of an AI chatbot conversation about wash sale rule exemptions.
What are the exemptions to the wash sale rule?
The wash sale rule prevents taxpayers from claiming a tax deduction for a security sold at a loss if they repurchase the same or substantially identical security within 30 days. However, there are some exemptions.
Can you explain what those exemptions are?
Sure! Exemptions include transactions involving different securities, such as mutual funds or ETFs that track different indexes, and certain transactions in retirement accounts.
What happens if I accidentally trigger the wash sale rule?
If you trigger the wash sale rule, the loss you intended to claim is disallowed for tax purposes, and it gets added to the cost basis of the repurchased security.
Are there any strategies to avoid triggering the wash sale rule?
Yes, one strategy is to wait at least 31 days before repurchasing the same security or to invest in a different but similar security.
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