a wash sale occurs when a taxpayer sells or trades stock or securities at a loss, and within 30 days before or after the sale: Buys substantially identical stock or securities, Acquires substantially identical stock or securities in a fully taxable trade, Acquires a contract or option to buy substantially identical stock or securities, or Acquires substantially identical stock for an individual retirement account (IRA). The "substantially identical stock" acquired in any of these ways is called the "replacement stock" for that original position. The IRS has not formally defined what "substantially identical" funds are constituted of. Consequences In the United States, the wash sale rule has the following consequences: The taxpayer is not allowed to claim the loss on the sale (the loss is not "realized"). Basis Adjustment: The disallowed loss is added to the cost basis of the replacement stock. Holding Period: The holding period for the replacement stock includes the holding period of the stock sold. In the United States, reporting wash sale loss adjustments is done on the 1099-B form. According to Forbes, "most brokers don't report wash sale (WS) loss calculations during the year". For the IRS, taxpayers in the United States must calculate their WS losses "across all taxpayer's brokerage accounts, including IRAs and spousal accounts if married/filing joint. Wash sale rules can also be avoided by "not buying a security within 30 days of selling the same one or a similar one for a loss." Basis adjustment After a sale is identified as a wash sale and if the replacement stock is bought within 30 days before or after the sale then the wash sale loss is added to the basis of the replacement stock. The basis adjustment preserves the benefit of the disallowed loss; the holder receives that benefit on a future sale of the replacement stock. However, if the replacement shares are in a tax-advantaged account, such as an IRA, the disallowed loss cannot be added to the basis and there is no benefit for the loss. Tax loss harvesting Tax loss harvesting (TLH) is a technique for "generating" capital losses. It occurs when an investor sells a security that has depreciated in value. CBS News describes tax loss harvesting specifically as "selling an investment at a loss with the intention of ultimately repurchasing the same investment after the IRS's 30 day window on wash sales has expired." This allows investors