Financial Planner

Answer: B - To maintain the ability to deduct losses from selling shares; one must wait 31 day before repurchasing those shares back. Selling shares at a loss and then buying them back within 30 days negates the ability to deduct such losses on a tax return; this is referred to the wash sale rule. The disallowed loss amount can be added to the cost basis of the additional shares that were purchased. When these additional shares are sold, any taxable gain or loss includes the loss incurred on the original shares. The wash sale rule applies not only to stocks but also mutual funds and bonds.