The Wash Sale Rule is a regulation set by the IRS that prevents investors from claiming a tax deduction for a loss on a security if they repurchase the same or substantially identical security within 30 days before or after the sale. This rule aims to discourage taxpayers from selling securities at a loss solely to claim a tax benefit while maintaining their investment position. If an investor violates the Wash Sale Rule, the disallowed loss is added to the cost basis of the repurchased security. This adjustment can affect future capital gains or losses when the security is eventually sold, impacting overall tax liability.