Investor Tax Primer: Capital Gains & Wash Sales

Short-Term vs Long-Term Capital Gains

Holdings sold within one year are taxed at your ordinary income rate (up to 37%). Holdings sold after one year qualify for long-term capital gains rates (0%, 15%, or 20%). Holding period determines which rate applies.

The Wash Sale Rule

If a security is sold at a loss and a substantially identical security is repurchased within 30 days before or after the sale, the IRS disallows the loss deduction. The rule applies to any repurchase within the window.

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