{"id":20124,"date":"2022-05-31T08:33:00","date_gmt":"2022-05-31T12:33:00","guid":{"rendered":"https:\/\/einvestingforbeginners.com\/?p=20124"},"modified":"2024-04-03T10:18:02","modified_gmt":"2024-04-03T14:18:02","slug":"wash-sale-tax-ansh","status":"publish","type":"post","link":"https:\/\/einvestingforbeginners.com\/wash-sale-tax-ansh\/","title":{"rendered":"Planning to Tax Loss Harvest? BEWARE of the Wash Sale Tax!"},"content":{"rendered":"\n
Updated 3\/20\/2024<\/em><\/p>\n\n\n\n One thing that many investors will realize throughout their investing journey is that trading in and out of stocks can be extremely expensive due to the amount of taxes you\u2019ll pay. To try to minimize that impact, they\u2019ll try to tax loss harvest but if you do it incorrectly, you\u2019re going to get crushed with a wash sale tax!<\/p>\n\n\n\n Key Takeaways:<\/strong><\/p>\n\n\n\n In this post, I\u2019m going to cover the following topics:<\/p>\n\n\n\n <\/p>\n\n\n\n When you sell a stock and then repurchase it within 30 days, a \u201cwash sale\u201d occurs. What this means is that the basis of your stock isn\u2019t reset like it usually would be, but instead, it\u2019s adjusted to reflect the original purchase and sale that you made. <\/p>\n\n\n\n Essentially, you miss out on the opportunity to use your investment loss to offset any future gains.<\/strong><\/p>\n\n\n\n Let me explain with an example:<\/p>\n\n\n\n\n\n\n\n If you were to buy 100 shares of company $XYZ for $100\/share, your cost basis\/share would be $100. If the share price drops to $80\/share and you decide to sell the shares, you will have lost $20\/share.<\/p>\n\n\n\n Then, let\u2019s say something comes out that entices you to repurchase those shares at $90\/share, within 30 days from when you initially sold the shares. This then triggers a wash sale. You effectively will take the $20\/share loss that you had from the initial purchase & sale and then add that to the new cost basis of your shares:<\/p>\n\n\n\n
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What is the Wash Sale Tax?<\/h2>\n\n\n\n
Wash Sale Tax Example<\/h4>\n\n\n\n