Updated October 2, 2026. Quick answer: A wash sale happens when you sell stock or securities at a loss and, within 30 days before or after the sale, buy substantially identical ones. The loss cannot be deducted that year, and the window runs 61 days counting the sale day. Buying in an IRA or through a spouse can trigger it too. On Form 8949 the disallowed loss is entered with code W as a positive number in column (g).
More IRS forms and schedules for individual filers, read line by line: Form 6781 instructions.
Read box by box from the IRS form text: Form 1099-CAP boxes 1 to 5.
Form 8949 for 2025, read code by code: Form 8949 code D, Form 8949 code L and Form 8949 code W.
What the rule says
Publication 550 opens the topic with the prohibition: “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.”
It then defines the event: “A wash sale occurs when you sell or trade stock or securities at a loss and within 30 days before or after the sale you:” The four triggers, in the publication’s order, are below.
- “Buy substantially identical stock or securities,”
- “Acquire substantially identical stock or securities in a fully taxable trade,”
- “Acquire a contract or option to buy substantially identical stock or securities, or”
- “Acquire substantially identical stock for your individual retirement arrangement (IRA) or Roth IRA.”
The 61 day window
The 30 days run on both sides of the sale. Counting the sale day, that is 61 calendar days in total, a figure computed here rather than printed by the IRS. An example with a sale on a single day:
| Item | Date | Note |
|---|---|---|
| Sale at a loss | December 1, 2026 | Tuesday (computed here) |
| Window opens: 30 days before | November 1, 2026 | Computed here |
| Window closes: 30 days after | December 31, 2026 | Thursday (computed here) |
| Days in the window, sale day included | 61 | Computed here: 30 + 1 + 30 |
A purchase on any of those dates is inside the window. The same count applies in reverse: a purchase made first and a loss sale made within 30 days afterward is also caught.
Substantially identical
There is no list. “In determining whether stock or securities are substantially identical, you must consider all the facts and circumstances in your particular case.” The usual starting point is the issuer: “Ordinarily, stocks or securities of one corporation are not considered substantially identical to stocks or securities of another corporation.” The publication adds that this can change, for example in a reorganization or with convertible preferred stock.
Options and contracts are covered. “The wash sale rules apply to losses from sales or trades of contracts and options to acquire or sell stock or securities.” For digital assets, the Schedule D instructions say “The wash sale rules generally apply to transactions involving digital assets that are also stock or securities for tax purposes (tokenized securities).” Plain crypto is addressed separately on the crypto wash sale page.
IRAs, spouses, and controlled corporations
The rule reaches beyond your own taxable account. “If you sell stock and your spouse or a corporation you control buys substantially identical stock, you also have a wash sale.” Item (4) in the list above makes an IRA or Roth IRA purchase count too. The Schedule D instructions say the usual basis add-back works differently there: “The basis of the substantially identical property (or contract or option to acquire such property) is its cost increased by the disallowed loss (except in the case of (4) earlier).”
Pub. 550 draws the same exception, so a retirement account purchase is not treated like a taxable purchase when it comes to basis. Employer stock grants can also matter; see the RSU wash sale page.
Basis and holding period add-back
“If your loss was disallowed because of the wash sale rules, add the disallowed loss to the cost of the new stock or securities (except in (4) above). The result is your basis in the new stock or securities.” The effect is a postponement: “This adjustment postpones the loss deduction until the disposition of the new stock or securities.” The holding period carries over too: “Your holding period for the new stock or securities includes the holding period of the stock or securities sold.”
Pub. 550 gives a sale at $750 of shares bought for $1,000, followed by a repurchase at $800. “you cannot deduct your loss of $250 on the sale.” The disallowed $250 raises the new basis to $1,050.
Partial wash sales
When the replacement count differs from the sale count, only some shares are caught. “You do this by matching the shares bought with an equal number of the shares sold.” In one Pub. 550 example, 100 shares are sold at a $1,000 loss after 75 shares of substantially identical stock were bought in the prior 30 days, and the publication says “you cannot deduct the loss ($750) on 75 shares. You can deduct the loss ($250) on the other 25 shares.”
Reporting a wash sale on Form 8949
“Report a wash sale transaction in Part I or Part II of Form 8949 with the appropriate box checked. Complete all columns. Enter “W” in column (f). Enter as a positive number in column (g) the amount of the loss not allowed.”
The broker may already show it: “However, you cannot deduct a loss from a wash sale even if it is not reported on Form 1099-B.” Box 1g is covered on the 1099-B box 1g page, and the column rules are on the Form 8949 page. The sources read were the 2025 Pub. 550 and Form 8949 instructions, the revisions the IRS served on 2026-10-02 for returns filed in 2026.
Common mistakes
- Checking only the same account. The rule also counts purchases in an IRA, Roth IRA, or by a spouse.
- Relying on the 1099-B alone. The IRS says a wash sale loss is not deductible even if the broker does not report it.
- Treating the loss as gone. The disallowed amount is added to the basis of the new shares, outside the IRA case.
Related: Form 8949 instructions, tax loss harvesting, the capital loss harvest helper, and Form 1099-B box 1g.
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Answer againSources
- IRS Publication 550, Investment Income and Expenses (2025): https://www.irs.gov/pub/irs-pdf/p550.pdf
- Instructions for Schedule D (Form 1040) (2025): https://www.irs.gov/pub/irs-pdf/i1040sd.pdf
- Instructions for Form 8949 (2025): https://www.irs.gov/pub/irs-pdf/i8949.pdf
Read from the IRS documents linked above on October 2, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the account provider or the IRS is the right place to confirm anything consequential.