Regarding the sale of Hayley's shares in the XYZ Growth Mutual Fund, which statement is accurate?

When dealing with capital gains and losses in the context of mutual funds and the Internal Revenue Code, it's crucial to understand the implications of the wash sale rule. This rule applies when a taxpayer sells a security at a loss and then repurchases the same security or substantially identical stock or securities within a 30-day period before or after the sale. Under these circumstances, if Hayley were to sell her shares in the XYZ Growth Mutual Fund and then repurchase shares in the same or a substantially identical fund within the 30-day window, the loss she incurred—$2,500 in this case—would indeed be disallowed for current tax purposes.

This disallowed loss does not mean that Hayley loses it entirely; instead, it is added to the basis of the new shares she purchases. However, for the accuracy of the specific scenario presented, it highlights that immediate repurchase of the same mutual fund or a substantially similar one can affect the deductibility of capital losses. Therefore, the concern revolves around the timing of repurchase actions in relation to loss realization.

Understanding this aspect of tax law is crucial for accurate tax planning, as it affects how capital losses and gains are recognized and utilized for tax benefits. Additionally, knowing the implications of wash sales helps