[kris-tl-uh-zey-shuh
n] 
| 1. | the act or process of crystallizing. |
| 2. | a crystallized body or formation. |
| crys·tal·lize also crys·tal·ize (krĭs'tə-līz') v. crys·tal·lized also crys·tal·ized, crys·tal·liz·ing also crys·tal·iz·ing, crys·tal·liz·es also crys·tal·iz·es v. tr.
|
Crystallization
The act of selling and buying stocks almost instantaneously in order to increase or decrease book value. This is a routine method used by many investors and companies to change book values without changing beneficial ownership.
Investopedia Commentary
An example of this occurs when an investor needs to take a capital loss for a particular stock, but still believes the stock will rise. Thus, he/she would crystallize the paper loss by selling the stock and buying it back right away.
Most tax agencies have regulations (such as the wash-sale rule) to prevent taking a capital loss in this fashion.
Related Links
Selling Losing Securities for a Tax Advantage
Don't Put Off Your Year-End Plan
See also: Book Value, Capital Loss, Paper Profit (or Loss), Wash Sale, Wash-Sale Rule
Also spelled: crystalization
crystallization crys·tal·li·za·tion (krĭs'tə-lĭ-zā'shən)
n.
The formation of crystals or the assumption of a crystalline form.
