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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.

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