When a security is sold at a loss and and a substantially identical security has been purchased within 30 days before the sale date the loss is disallowed because it is classified as a wash sale.

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This statement is true. A wash sale occurs when a security is sold at a loss and a substantially identical security has been purchased within 30 days before or after the sale date. In such cases, the loss is disallowed for tax purposes.

When a Security Is Sold at a Loss and And a Substantially