A wash sale is defined as the sale of an asset, such as stocks or bonds, at a loss, followed by the repurchase of the same or substantially similar asset within 30 days before or after the sale. This method is often used to realize a loss for tax purposes. However, in most cases, the IRS has deemed such losses non-deductible in order to prevent taxpayers from claiming artificial losses without significantly altering their investment position.
[Last updated in July of 2024 by the Wex Definitions Team]