General
bed-and-breakfast
What does bed-and-breakfast mean?
A British tax dodge where you sell a losing position one evening and buy it straight back the next morning. You keep the position, you crystallise the capital loss, HMRC gives you the writedown. Killed off in 1998 when the 30-day rule made the round-trip pointless.
"You can't really bed-and-breakfast UK stocks any more — the 30-day rule eats the loss."
Origin
London Stock Exchange jargon, named for the overnight stay between sale and repurchase.
Frequently asked questions
What does bed-and-breakfast mean in finance?
It means selling a stock at the close and buying it back at the open to bank a tax loss.
How do you use bed-and-breakfast in a sentence?
"He did a bed-and-breakfast trade to lock in the loss before year-end."
Why is it called bed-and-breakfast?
Because you sell the shares in the evening (at the close) and buy them back the next morning (at the open), like an overnight stay.
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