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A "Wash Sale" is trading activity in which shares of a security are sold at a loss and a substantially identical security is purchased within a 61-day window that extends from 30 days before the date of the sale to 30 days after the date of the sale. The portion of the loss associated with the wash sale is then deferred and cannot be immediately recognized.


Per IRS Publication 550 Investment Income and Expenses (Including Capital Gains and Losses), page 72:

Wash sale: A sale of stock or securities at a loss within 30 days before or after you buy or acquire in a fully taxable trade, or acquire a contract or option to buy, substantially identical stock or securities.

Page 56:

Wash Sales

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.

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:

  1. Buy substantially identical stock or securities,
  2. Acquire substantially identical stock or securities in a fully taxable trade,
  3. Acquire a contract or option to buy substantially identical stock or securities, or
  4. Acquire substantially identical stock for your individual retirement arrangement (IRA) or Roth IRA.

If you sell stock and your spouse or a corporation you control buys substantially identical stock, you also have a wash sale.

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. This adjustment postpones the loss deduction until the disposition of the new stock or securities. Your holding period for the new stock or securities includes the holding period of the stock or securities sold.


To report a capital gain or loss wash sale in the TaxAct® program (if you need help reporting Form 1099-B, go to our Form 1099-B - Entering Capital Gains and Losses in Program FAQ):

  1. From within your Form 1099-B, continue with the interview process until you reach the screen titled Investment Sales - Adjustment Code(s).
  2. Click the data entry field below 1g. Wash sale loss disallowed, and type the amount.

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