Check if your stock trade triggers the IRS wash sale rule. Calculate disallowed losses and adjusted cost basis.
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⚠️ Wash Sale Triggered
You repurchased within 15 days (≤30 days). $3,000 of your loss is disallowed this tax year.
The disallowed loss is added to your replacement shares' cost basis, so you'll recover it when you sell those shares.
Replacement shares inherit the original holding period for long-term/short-term classification.
| Original Cost Basis | $10,000 |
|---|---|
| Sale Proceeds | $7,000 |
| Total Capital Loss | $3,000 |
| Days Between Trades | 15 days |
| Wash Sale? | Yes |
| Disallowed Loss | $3,000 |
| Deductible Loss | $0 |
| New Adjusted Basis/Share | $102.00 |
| Deferred Tax Benefit | $660 |
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When you sell a stock or security at a loss, the IRS normally lets you deduct that loss against gains or income (up to $3,000/year for net losses). The wash sale rule prevents you from claiming this deduction if you repurchase the same or substantially identical security within the 61-day window.
Example: You bought 100 shares of XYZ at $50 ($5,000). Price drops to $30. You sell for $3,000, realizing a $2,000 loss. If you buy XYZ again within 30 days, the $2,000 loss is disallowed.
However, the disallowed loss is added to your new cost basis. Your new shares now have a basis of $30 + $20 = $50 per share. When you eventually sell, you'll get the deduction then.
The IRS hasn't clearly defined this, but generally:
• Same stock: Always substantially identical
• Same company bonds: Substantially identical
• Options on same stock: Substantially identical
• Different index funds tracking same index: Gray area (Vanguard S&P 500 → Schwab S&P 500 may trigger)
• Different indices: Generally safe (S&P 500 ETF → Total Market ETF)
The wash sale rule applies across ALL your accounts:
• Sell at a loss in taxable → buy in IRA within 30 days = wash sale (and the loss is permanently disallowed since IRA basis adjustments don't help)
• Sell in one brokerage → buy in another brokerage = wash sale
• Your spouse buys the same security = wash sale
• Automatic dividend reinvestment within 30 days = potential wash sale
The IRS wash sale rule disallows claiming a tax loss if you buy the same or substantially identical security within 30 days before or after the sale at a loss.
No, in taxable accounts. The disallowed loss is added to the cost basis of replacement shares. However, if the repurchase was in an IRA, the loss IS permanently lost.
As of 2024, the wash sale rule does not explicitly apply to cryptocurrency (it only covers 'securities'). However, proposed legislation may change this.
Yes. Selling an S&P 500 fund and buying a Total Market fund is generally considered safe since they track different indices, even though they're correlated.
The window spans 30 days before the sale, the sale day itself, and 30 days after the sale. Any purchase of the same or substantially identical security within this 61-day period triggers the wash sale rule and disallows the loss.
The disallowed loss is added to the cost basis of your replacement shares. This means you eventually recover the tax benefit when you sell the replacement shares, effectively deferring rather than eliminating the deduction.
Yes. If you sell a stock at a loss and the same stock automatically reinvests dividends within 30 days, the reinvested shares can trigger a wash sale on the portion matching those shares. Turn off dividend reinvestment before harvesting losses.
Yes. Purchases in your IRA, 401(k), or spouse's accounts can trigger a wash sale on losses in your taxable brokerage account. Worse, losses disallowed by IRA purchases are permanently lost since IRA basis adjustments do not help.
The IRS has not defined this precisely, but the same stock, same index fund from different providers, and options on the same stock are all considered substantially identical. Funds tracking different indexes are generally considered safe replacements.
Your broker reports wash sales on Form 1099-B and adjusts cost basis automatically for same-account trades. Cross-account wash sales between brokerages or retirement accounts must be tracked manually and reported on Schedule D.
Wash Sale Window: 30 days before sale + sale day + 30 days after = 61 days
Disallowed Loss = Loss × (Wash Sale Shares ÷ Total Shares Sold)
Adjusted Basis = Repurchase Price + (Disallowed Loss ÷ Replacement Shares)
Every formula on this page traces to a federal agency, central bank, or peer-reviewed institution. We cite the rule-makers, not secondhand blogs.
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Calculations are for educational purposes only. Consult a qualified financial advisor for personalized advice.