A wash sale occurs when you sell or trade stock or securities (including a contract or option to acquire or sell stock or securities) at a loss and, within 30 days before or after the sale, you:

1. Buy substantially identical stock or securities,
2. Acquire substantially identical stock or securities in a fully taxable trade, or
3. Acquire a contract or option to buy substantially identical stock or securities, or
4. Acquire substantially identical stock for your individual retirement account  (IRA) or Roth IRA.

Please Note: You cannot deduct losses from sales or trades of stock or securities in a wash sale.

Here is an example of how to enter a wash sale in our program:

Mary purchased Dell stock for $500 on January 1, 2010.  She sold the stock for $300 on May 5th of the current tax year.  On May 15th (within 30 days of the sale for a loss), she bought substantially identical Dell stock.  Because this purchase was within 30 days of the sale for a loss, and because the purchase was of substantially identical stock, the loss would be a Wash Sale.  Report this Wash Sale as follows:

First Entry
Description of Property: Dell Stock
Date Acquired: 01/01/2010
Date Sold: 5/5
Sales Price: 300
Cost: 500

Second Entry
Description of Property: Wash Sale
Date Acquired: 01/01/2010
Date Sold: 5/5
Sales Price: 500
Cost: 300