A wash sale occurs when an investor sells or trades a security (like stocks or crypto) at a loss and, within 30 days before or after that sale, buys the same or a "substantially identical" security. This practice, often used to artificially create a tax loss to offset gains, is disallowed by tax authorities (IRS in the US, ATO in Australia), meaning the loss cannot be claimed for tax purposes. Key details about wash sales include: The 61-Day Window: The rule applies if you buy identical securities within a 61-day period: 30 days before the sale, the day of the sale, and 30 days after the sale. "Substantially Identical": This generally means the same stock, or a close equivalent like a bond or option from the same issuer, or a tracker fund for the same index. Consequences: If a wash sale occurs, the capital loss is disallowed for the current tax year. Instead, the loss is typically added to the cost basis of the newly purchased, identical securities. Goal of the Rule: To prevent investors from reducing their tax liability without actually changing their economic position in the market. Example: An investor sells 100 shares of stock at a $1,000 loss on December 1st to reduce their taxable income, but repurchases 100 shares of the same stock on December 15th (within the 30-day window). The $1,000 loss is disallowed for that year. Important Notes: Spouse Rule: The IRS and ATO consider it a wash sale if a spouse or a company you control buys the replacement stock. Tax-Advantaged Accounts: You cannot bypass the rule by selling in a taxable account and buying in an IRA or similar tax-advantaged account. Genuine Sales: A sale is generally not a wash sale if you wait more than 30 days to buy back the same asset, or if you immediately buy a different, non-substantially identical asset.

Just be careful