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Would it be possible for her to sell all her stocks and deduct this loss for tax purposes even if she were to repurchase them a week later? Is this a genuinely legal way of claiming losses and reducing the tax bill?

No. Unless she waits 30 days after the sale before repurchasing, it is a "wash sale." (The wash sale rule also applies if she buys the "replacement" shares before the sale for a loss.)

This is discussed in the FAQ.

Phil Marti
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