The Wash Sale Rule: When a Stock Loss Is Delayed
Published November 5, 2026
You usually can deduct a loss when you sell stock for less than you paid. The wash sale rule is an exception. If you sell stock at a loss and buy substantially identical stock within a set window, you cannot deduct that loss right away. IRS: Publication 550, Investment Income and Expenses (2025)
The 30-day window
A wash sale happens when you sell or trade stock or securities at a loss and, within 30 days before or after the sale, you do any of these:
- 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
- Acquire substantially identical stock for your IRA or Roth IRA
The window counts 30 days before the sale, the day of the sale, and 30 days after. That is 61 days in all. If your spouse buys substantially identical stock, or a corporation you control buys it, the rule can still apply to you. IRS: Publication 550, Wash Sales
What happens to the loss
The disallowed loss is not lost for good. You add it to the cost of the new shares. That number becomes your basis in the new shares. The loss is then deducted later, when you sell the new shares in a sale that is not a wash sale. Your holding period for the new shares also includes the time you held the old ones.
Illustration only, with made-up numbers. Kim buys 100 shares for $1,000. Kim sells them for $750, a $250 loss. Within 30 days, Kim buys 100 shares of the same stock for $800. The $250 loss cannot be deducted now. Kim adds the $250 to the $800 cost, so the basis of the new shares is $1,050.
Shares bought in an IRA
Buying substantially identical stock inside an IRA or Roth IRA can trigger the rule too. In that case the loss is not added to the basis of an IRA holding. It is lost for tax purposes. IRS: Publication 550, Wash Sales Be careful with automatic investment plans and dividend reinvestment in the same stock during the window.
How the loss is reported
Your broker may show the disallowed loss in Box 1g of Form 1099-B. The broker shows it only in some cases, such as covered securities bought in the same account with the same CUSIP number. You cannot deduct a wash sale loss even if the form does not show it. IRS: Publication 550, Nondeductible wash sale loss
Report the sale on Form 8949. Enter the letter "W" in column (f). Enter the disallowed loss as a positive number in column (g). Use the Form 8949 instructions for the rest of the entries. IRS: Publication 550, How to report
Where the rule does not apply
The wash sale rule does not apply to a dealer in stock or securities whose loss comes from business activity. It also does not apply to losses from commodity futures contracts or foreign currencies. IRS: Publication 550
Steps to take
- List each stock or security you sold at a loss in the year.
- Check every purchase of the same or substantially identical stock from 30 days before to 30 days after each sale.
- Include purchases by your spouse, purchases in your IRA or Roth IRA, and option purchases.
- If the rule applies, adjust the basis of the new shares and keep the records.
- Report the sale on Form 8949 with code "W" and the disallowed loss.
Keep trade confirmations and your broker's year-end statements. They show the dates and cost basis you need.
General information, not advice about your return.
Sources: Sources: IRS, Publication 550, Investment Income and Expenses, for use in preparing 2025 returns (https://www.irs.gov/publications/p550); IRS, Topic no. 409, Capital gains and losses (https://www.irs.gov/taxtopics/tc409) This is general information, not advice about your specific return.
