A wash sale occurs when you sell a security at a loss and buy a substantially identical security within 30 days before or after the sale.
Why wash sales matter
The IRS disallows the tax deduction for losses on wash sales. The disallowed loss is added to the cost basis of the replacement shares.
Wash sale window
The wash sale rule applies if you buy substantially identical securities:
- 30 days before the sale, OR
- 30 days after the sale
This creates a 61-day window (30 days before + sale day + 30 days after).
What's "substantially identical"?
- Same stock or security
- Options on the same stock (in some cases)
- Contracts to acquire the same stock
How Aries handles wash sales
Aries tracks wash sales and adjusts your cost basis automatically. You'll see wash sale adjustments reflected in your tax documents.