What is Wash-Sale Rule?
Definition The wash-sale rule disallows a tax loss when you sell a security at a loss and buy the same or a substantially identical security within 30 days before or after the sale. Instead of vanishing, the disallowed loss is added to the cost basis of the replacement shares, deferring the benefit. The rule applies across accounts, including a spouse's and IRAs.
It is the main trap in tax-loss harvesting, so understanding it keeps clients from accidentally forfeiting the losses they were trying to capture.