Titan Medical Inc (TMDIF)

[RockoTaco]

Understanding Wash-Sale Rule
The intent of the wash-sale rule is to prevent taxpayers from claiming artificial losses. Conversely, if a taxpayer were to register a gain by selling securities, and within 30 days they were to buy identical replacement securities, the proceeds from that transaction would still be taxable. The sale of options (which are quantified in the same ways as stocks) at a loss and reacquisition of identical options in the 30-day timeframe would also fall under the terms of the wash-sale rule. So the wash-sale period is actually 61 days, consisting of the 30 days before to 30 days after the date of sale.


Wash-Sale Rule Example
For example, you buy 100 shares of XYZ tech stock on November 1 for $10,000. On December 15, the value of the 100 shares has declined to $7,000, so you sell the entire position to realize a capital loss of $3,000 for tax deduction purposes. On December 27 of the same year, you repurchase the 100 shares of XYZ tech stock back again to reestablish your position in the stock. The initial loss will be not be allowed to be counted as a tax loss since the security was repurchased within the limited time interval.