To claim a loss for U.S. federal tax purposes, sell the stock or security and avoid acquiring substantially identical stock or securities from 30 days before through 30 days after the sale. Check every relevant account—not just the account where you sold—including an IRA or Roth IRA, your spouse’s accounts, and corporations you control. Also check options, contracts, automatic reinvestments and other acquisitions. A different ticker is not an automatic safe harbor.
The wash-sale rule is a timing and matching rule, not a ban on selling. If it applies, the loss is generally disallowed for the current return and handled through basis adjustments for taxable replacement shares; an IRA or Roth IRA acquisition has a different result. This guide explains how to plan the sale, identify hidden replacements, calculate a partial wash sale and report it correctly under current U.S. federal guidance.
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What the wash-sale rule requires
Internal Revenue Code section 1091, as explained by the Internal Revenue Service (IRS), applies when you sell or trade stock or securities at a loss and, within the relevant period, acquire substantially identical stock or securities. The acquisition can be a purchase, a fully taxable trade, or a contract or option to acquire the stock or securities. The rule also covers certain losses from short sales and transactions involving options.
The IRS states: You cannot deduct losses from sales or trades of stock or securities in a wash sale unless the loss was incurred in the ordinary course of your business as a dealer in stock or securities.
— Internal Revenue Service, Publication 550 (2025), Investment Income and Expenses, chapter 4.
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The dealer exception is narrow. An ordinary investor should assume the rule applies unless the transaction clearly falls outside it after reviewing the facts.
Map the 61-day monitoring period
For a normal purchase and sale of listed shares, treat the sale date as day zero. The monitoring period contains the 30 calendar days before the sale, the sale date itself and the 30 calendar days after it. An acquisition on either side can create a wash sale. This is why buying first and selling at a loss later can be just as important as what you buy after the sale.
Before the loss sale
Review the 30 days leading up to the proposed sale. A purchase made during that period can be matched to shares sold at a loss, even though the purchase occurred before the loss was realized. Include scheduled investments, dividend-reinvestment purchases and employee or other equity awards when they result in an acquisition of substantially identical shares.
After the loss sale
Continue checking for 30 days after the transaction settles or is otherwise completed under the applicable trading rules. Do not assume that waiting until the calendar month changes is enough; count actual calendar days from the transaction date and confirm the treatment of any unusual transaction with a tax professional.
Why 61 days is only a shorthand
The 61-day description is useful for ordinary cash sales, but it does not resolve every timing issue. Short sales can have a different relevant completion date, especially when you already own identical securities or have entered a contract or option to acquire them. Options and other contracts may also create an acquisition before shares are delivered. Publication 550 provides the governing examples; use the tax-year version applicable to your return.
Identify what counts as “substantially identical”
There is no universal ticker-symbol test. IRS guidance applies a facts-and-circumstances analysis. Two securities can be substantially identical even when their names, tickers or issuers differ, while a change in an investment’s terms may or may not be enough to avoid the rule.
Do not rely on a different ticker alone
Switching from one fund to another fund with a similar portfolio or benchmark is not automatically safe. The IRS has not created a general ETF-to-ETF safe harbor for funds that track similar indexes. A nominally different product can still present a substantially-identical question, and a professional should review the instruments’ holdings, rights and economic terms.
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The rule can reach a contract or option to buy stock or securities, not only a completed share purchase. An option may therefore matter during the 30-day period even if it is never exercised. Whether a particular option, convertible instrument or other contract is substantially identical depends on its terms and the underlying security.
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Funds and broad market exposure
If preserving market exposure matters, you can consider remaining in cash for the waiting period or using an investment that is not substantially identical. The tax law does not provide a blanket list of “safe” replacement funds. A substitute must be evaluated on its own facts, so avoid treating any named strategy as guaranteed to prevent a wash sale.
Search every account and related person
Looking only at the brokerage account that generated the loss is not enough. Publication 550 addresses acquisitions in other settings that can affect the taxpayer’s analysis.
Your other taxable accounts
Aggregate purchases across your taxable brokerage accounts. A replacement bought at another broker can still be relevant even when the firms do not exchange wash-sale information.
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IRAs and Roth IRAs
IRS guidance includes substantially identical stock acquired for your traditional IRA or Roth IRA. Moving the replacement purchase into a retirement account is not a dependable way to avoid the rule. Publication 550 says the normal basis increase does not apply when the replacement acquisition is in an IRA or Roth IRA, so the tax consequence differs from a replacement held in a taxable account. The exact result can be significant and should be reviewed with a qualified tax adviser.
Your spouse
The rule can apply when your spouse buys substantially identical stock or securities during the period. Coordinate transactions in separate accounts before realizing a loss.
A corporation you control
Publication 550 also addresses purchases by a corporation that you control. Review controlled-entity activity when a company account, compensation plan or other related arrangement could acquire the same or substantially identical investment.
A pre-sale checklist that avoids common surprises
- Confirm the loss. Identify the specific lots, original basis, sale proceeds and commissions or other adjustments. A wash sale matters only when the sale or trade produces a loss.
- List every potential acquisition. Search the 30 days before and after the sale across taxable accounts, IRAs, Roth IRAs, spouse accounts and controlled corporations. Include purchases, reinvested distributions, recurring contributions, awards, options and contracts.
- Describe the instruments, not just the tickers. Record the issuer, class, CUSIP when available, share count, option terms, benchmark exposure and transaction date. This information supports a substantially-identical analysis.
- Decide how much exposure you need. Waiting until the post-sale period ends eliminates the ordinary replacement risk, but it leaves you out of the position temporarily. A different investment may preserve some exposure, yet there is no universal IRS safe harbor.
- Tell household members and plan administrators. Spouse purchases, automatic reinvestment settings and retirement-account contributions can occur without appearing in the account used for the sale.
- Save evidence. Keep confirmations, statements, corporate-account records, plan documents and correspondence showing how you determined whether an acquisition was substantially identical.
What happens when a wash sale occurs
A wash sale generally changes when and where the loss is recognized rather than making every loss vanish in the same way. The result depends on the replacement property and the number of shares matched.
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Taxable replacement shares
When replacement shares are acquired in a taxable account, the disallowed loss is generally added to the replacement shares’ basis. The higher basis can preserve the economic loss for a later taxable disposition, and the IRS example carries the original holding period into the replacement shares. The deduction is therefore postponed until the replacement property is disposed of, subject to the rules that apply at that later time.
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Retirement-account replacement shares
For an acquisition in an IRA or Roth IRA, Publication 550 says the normal basis increase does not apply. Do not assume that a later retirement-account sale will restore the disallowed loss through the taxable-account basis mechanism. Because retirement-account consequences depend on the exact transaction and account type, obtain individualized advice before relying on this strategy.
Fewer replacement shares than shares sold
The IRS matches replacement shares to an equal number of shares sold. Only the matched portion of the loss is disallowed. If there are several replacement purchases, matching proceeds in purchase order.
Example: You sell 100 shares at a $10-per-share loss, creating a $1,000 loss. Within the monitoring period, you acquire 40 substantially identical shares. The matched 40 shares produce a $400 disallowed loss, generally added to the taxable replacement shares’ basis. The remaining 60 shares’ $600 loss is not disallowed by those 40 replacements, assuming no other acquisition creates additional matches.
How to report the adjustment
A broker’s tax form is useful evidence, but it is not the complete wash-sale analysis.
What a broker may report
For covered securities, a broker may report a wash-sale amount in Form 1099-B, box 1g, when the replacement security has the same CUSIP and was bought in the same account. The Form 1099-B reporting instructions describe that boundary. A blank or zero box 1g does not establish that no wash sale occurred across accounts, related parties, retirement accounts or transactions outside the broker’s reporting scope.
What you must do on your return
Reconcile the broker statement with your own records and the Form 8949 instructions for the relevant tax year. When a loss is disallowed, report the transaction on Form 8949, use adjustment code W and enter the disallowed amount as a positive adjustment. Carry the corrected totals to Schedule D as instructed. Confirm the current forms and instructions because IRS labels and reporting requirements can change by tax year.
When the broker’s number differs from yours
Do not automatically overwrite your analysis with the 1099-B amount. Investigate differences caused by another account, a spouse’s purchase, a retirement-account acquisition, an option or contract, a different CUSIP, partial matching or a transaction the broker did not have to report. Retain a written reconciliation showing the lots and calculations used on the return.
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Short sales
A loss on a short sale is subject to wash-sale provisions in certain circumstances. The relevant date can depend on when the short sale is completed and whether you already own identical securities or have a contract or option to acquire them. Do not apply the ordinary long-position calendar example mechanically to a short position.
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Options and derivative contracts
An option or contract to acquire stock or securities can be a replacement acquisition. Its exercise, expiration, assignment and terms may affect the analysis. A derivative that references a similar market exposure is not automatically outside the rule.
Automatic reinvestment
Dividend or capital-gain reinvestment can purchase fractional or whole shares during the window. Turn off reinvestment temporarily, redirect distributions to cash, or account for the resulting lots in your matching calculation if the investment could be substantially identical.
Employee awards and plan transactions
Restricted-stock releases, employee purchase plans and other compensation arrangements can create acquisitions even when you did not place a normal buy order. Obtain the transaction dates and tax-basis records from the plan administrator before selling at a loss.
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| Choice | Tax-wash-sale risk | Main trade-off |
|---|---|---|
| Remain in cash until the post-sale period ends | Lowest risk from a replacement purchase, provided no other acquisition occurs | You may miss market gains or distributions while out of the position |
| Buy a security you have determined is not substantially identical | Cannot be guaranteed by a ticker change; facts and circumstances still control | May preserve only part of the intended exposure and requires documented analysis |
| Keep the original position | No wash sale because there is no loss sale | You forgo the current loss and retain the existing investment risk |
| Sell and repurchase substantially identical shares inside the period | High likelihood of a wash sale for the matched shares | The current deduction is deferred or otherwise changed, and an IRA/Roth IRA replacement has different treatment |
The choice is not simply “same ticker versus different ticker.” The controlling question is whether the replacement is substantially identical under the facts, and the IRS has not published a universal fund-substitution safe harbor.
Records to keep for each loss sale
- Trade date, completion or settlement information where relevant, and account name.
- Security description, CUSIP if available, share quantity and lot identification.
- Original basis and proceeds, including adjustments for commissions or corporate actions.
- All purchases, reinvestments, awards, options and contracts during the 30-day periods.
- Statements from taxable accounts, IRAs, Roth IRAs, spouse accounts and controlled corporations that were reviewed.
- The replacement-share matching schedule, including purchase-order matching when there is more than one replacement.
- Form 1099-B, Form 8949, Schedule D and the tax-year instructions used to prepare the return.
Common mistakes and how to correct them
Counting only the 30 days after the sale
Problem: A purchase made before the sale is overlooked.
Correction: Start the review 30 days before the proposed sale and continue 30 days after it.
Assuming another account is invisible
Problem: A separate broker, IRA or spouse account is excluded because it does not appear on the same statement.
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Treating a new ticker as conclusive
Problem: A fund with a different name is treated as automatically safe.
Correction: Compare the instruments’ legal and economic characteristics and document a facts-and-circumstances conclusion. Ask a tax professional when the products are closely related.
Accepting the 1099-B without reconciliation
Problem: The broker reports no wash-sale adjustment, so the loss is claimed without checking other accounts.
Correction: Use the broker form as one input, then perform the taxpayer-level review and make any required Form 8949 code W adjustment.
Calling every disallowed loss permanently lost
Problem: The investor assumes the loss can never matter again.
Correction: For taxable replacement property, track the adjusted basis and holding period. Treat IRA and Roth IRA acquisitions separately because the normal basis increase does not apply.
When professional advice is warranted
Consult a qualified tax professional before filing when the transaction involves options or contracts, short sales, multiple replacement lots, controlled corporations, an IRA or Roth IRA, closely related funds, substantial dollar amounts or a disagreement with the broker’s reporting. Provide the professional with confirmations and statements from every relevant account, not just the account that executed the loss sale.
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Scope and tax-year limits
This explanation covers U.S. federal income-tax treatment based on IRS Publication 550 (2025), the 2025 Instructions for Schedule D (Form 1040), the 2026 Instructions for Form 1099-B and related IRS material, including Internal Revenue Bulletin 2008-3 concerning an IRA or Roth IRA acquisition. Use the publication and forms for the tax year you are filing. State, local and non-U.S. rules can differ, and this is general information rather than individualized tax advice.
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