Wash sales

You’ve executed a wash sale if you sell or trade stock or securities at a loss and within 30 calendar days, do one of the following:

• Buy or acquire substantially identical stock or securities as a taxable trade

• Acquire a contract or option to buy substantially identical stock or securities

• Acquire substantially identical stock for your retirement account (traditional or Roth IRA)

Wash sales apply across all your investing accounts, including outside your Sav accounts. Keep in mind, the wash-sale window applies to purchases 30 days before and after selling for a loss. Including the day of sale, this equals a 61-day window.

The IRS prohibits taxpayers from claiming losses from wash sales for tax purposes. You can find your total wash sales for the year in Box 1G on your 1099 tax document.

Example

An example of a wash sale is if you:

• Purchase 100 shares of YOWL for $1,000

• 2 weeks later, sell them for $800

• 2 weeks after the sale, you repurchase 100 new shares of YOWL for $900

• 2 weeks after the repurchase, you sell that 100 YOWL shares for $1,300

Because of the wash sale rule, the $200 loss is disallowed and added to the cost basis of the repurchased shares. When you sell the repurchased shares any gain or loss from this trade is based on a cost of $1,100. ($900 original cost + $200 disallowed loss).

We recommend consulting a tax professional to help determine if your holdings are substantially similar or identical. Check out the IRS Publication 550 for more information.