As we all know, capital loss can be tax deductible, up to $3000. But wash sale is an exception.
What the hell is wash sale?
In general you have a wash sale if you sell stock at a loss, and buy substantially identical securities within 30 days before or after the sale.
What can we do to avoid wash sale?
Don’t buy any stocks back before/after selling them for losses. Instead, long some similar stocks as "replacement" stock. Thirty-one days later you can switch back to your original stock if that is your wish. But there's no guarantee that any two stocks will move in the same direction, or with the same magnitude.
Or
Simply totally close all wash sale positions by year end.
There's no risk-free way to get around the wash sale rule. But then again, continuing to hold a stock that has lost value isn't risk-free, either. In the end it's up to you to evaluate all the risks, and balance them against the benefit you'll receive if you can claim a deduction for your loss.
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The wash sale rule can apply even if you don't acquire stock. If you enter into a contract or option to acquire stock, that's enough to make the wash sale rule apply. Your sale of stock can also be a wash sale if, within the wash sale period, you sell a put option on the same stock that's "deep in the money." And you can have a wash sale from selling options at a loss, too. For more on this subject see Wash Sales and Options.
