Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Wash

What it is:

A wash occurs when two actions cancel each other out (such as a gain and an equal loss), effectively creating a break-even situation.

How it works (Example):

Let's assume XYZ Company sells $1,000 worth of products. If these products cost XYZ Company $1,000 to manufacture, the transaction is considered a wash. Likewise, if an investor makes a $1,000 profit on an investment but loses $1,000 on another investment during the same time, the result is considered a wash.

Why it Matters:

Obviously, profit motivates most companies to minimize wash transactions. However, wash transactions may have tax benefits, most of which are illegal. Investors should be aware of specific tax rules and prohibitions regarding wash transactions (see Wash Sale).
 

Related Terms View All
  • Vittorio Mincato
    Born in 1936, Mincato is an accountant on paper. His first any only employer was Italian...
  • Baby Bills
    With its Windows and Office products, Microsoft has dominated the market for computer...
  • Zero Capital Gains Rate
    For example, downtown ABCTown has decayed over the last 10 years. There are many vacant...
  • Street Expectation
    Market analysts consider economic conditions, consumer sentiment, research and...
  • Fortune 100
    Companies that report their financial data to a United States government agency are...