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What is a “wash sale” and why does it matter?

A wash sale results from the sale of an investment when a substantially identical investment was purchased within 30 days before or after the sale date. The IRS prohibits claiming losses on wash sales.

Wealthfront’s tax-loss harvesting algorithms manage your accounts to avoid wash sale issues within your Wealthfront investment portfolio. This includes both sale and purchase timing, as well as choosing alternate ETFs that are not substantially identical to your primary (initial) ETFs.

For more on wash sales, please see the IRS website or consult your tax advisor.

Nothing in this blog should be construed as tax advice, a solicitation or offer, or recommendation, to buy or sell any security. Financial advisory services are only provided to investors who become Wealthfront Inc. clients pursuant to a written agreement, which investors are urged to read carefully, that is available at www.wealthfront.com. All securities involve risk and may result in some loss. For more information please visit www.wealthfront.com or see our Full Disclosure. While the data Wealthfront uses from third parties is believed to be reliable, Wealthfront does not guarantee the accuracy of the information.

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