Wash Sale

Selling a security at a loss and buying a substantially identical one shortly after, disallowing the tax loss.

The wash sale rule blocks investors from claiming a tax deduction on a losing investment if they buy the same or a nearly identical security within thirty days before or after the sale. It exists to stop investors from selling purely to book a tax loss while keeping their actual market position unchanged.

She sold the losing stock for a tax write-off but triggered a wash sale by buying it back a week later.