◈ GLOSSARY · INVESTING
Wash Sale.
A definition, in plain English — with the books that teach it.
Reviewed by ClearValue Editorial Team · Jun 27, 2026
◈ DEFINITION
What it means
Definition
An IRS rule that disallows a tax loss if you buy the same or a substantially identical security within 30 days before or after the loss sale. The disallowed loss isn't gone forever — it gets added to the cost basis of the replacement shares — but it can't be claimed in the current tax year. The rule applies across all your accounts, including your spouse's and your IRA, which trips a lot of people up.
◈ IN PRACTICE
Example
You sell 100 shares of a stock at a $2,000 loss on December 15 and rebuy 100 shares on December 28. The $2,000 loss is disallowed for that tax year and instead added to the basis of the new shares. Wait 31 days and the loss is yours to claim.