Tax-loss harvesting

Selling an investment in a taxable account for less than you paid, to realise a capital loss that offsets gains and, up to a yearly limit, ordinary income, then buying a similar but not substantially identical investment to stay invested. The wash sale rule disallows the loss if the same or a substantially identical security is bought within 30 days before or after the sale. It defers tax rather than erasing it, because the replacement has a lower cost basis.