Generally, a wash sale occurs when you sell stock at a loss and purchase substantially identical stock within 30 days before or after the sale. These transactions leave you in the same position as before, essentially negating the sale.
For example, if you sell 100 shares of AAPL at a loss on December 15th and then buy 100 shares of AAPL on January 10th, the December 15th sale becomes a wash sale, and you cannot deduct the loss on your taxes.
Often overlooked in wash sales is the 61-day wash sale period. This includes the day of the sale, the 30 calendar days preceding it, and the 30 calendar days following it. For instance, if a sale occurs on December 31st, the wash sale period encompasses all of December and the first 30 days of January.
Allowing Wash Sales on Double
By default our optimizer prevent wash sales from occurring on your account. Note that Double is only able to prevent wash sales for securities it knows about - aka stocks that are held and managed by Double. If you have another account that trades stocks you may have wash sales despite this flag being enabled.
There are two ways to allow for wash sales on Double. One is from the "Allow Wash Sales" check box on a portfolio weight change. This means that during the time your portfolio change is happening, wash sales will be allowed.
The other was is to go to your Setting Page and change the Wash Sale Prevention Enabled setting to False. Read more about your optimization settings here.
Why Allow Wash Sales?
You might want to allow wash sales if you changing your portfolio weights dramatically and want to make sure you move quickly to your new targets. Otherwise some weight changes may be prevented from changing closer to their targets for up to 60 days.
โ