The U.S. wash-sale rule generally prevents a taxpayer from taking a current loss when substantially identical stock or securities are acquired within 30 days before or after the loss sale. The sale date plus the two 30-day sides create a 61-day review period.
The rule follows the taxpayer and relevant acquisition, not merely a line on one Form 1099-B. One broker can detect a sale and purchase it holds, but it may not know what happened in another brokerage account, a spouse’s account, an IRA, or an automatic dividend-reinvestment plan. Build your own household timeline before selling.
Start with the tax-lot identification guide so the shares sold, adjusted basis, and original holding periods are correct. Then add every possible replacement acquisition.
Build the timeline before the trade
List each acquisition of the same security and any security that might be substantially identical from day −30 through day +30 relative to the planned loss sale. Include regular purchases, recurring investments, dividend and capital-gain reinvestment, option exercises, employee-plan acquisitions, gifts into the taxpayer’s control, short-sale-related events, and purchases in retirement accounts.
The phrase “30 days before or after” is not the same as waiting until the next calendar month. Count actual dates. If shares are sold at a loss on June 15, review acquisitions from May 16 through July 15, subject to the precise application of current rules.
Turning off reinvestment only after the sale may be too late because a purchase in the prior 30 days can match. Conversely, selling on December 31 does not make a January purchase irrelevant. Tax years do not break the window.
Match shares and calculate the adjustment
Suppose 100 shares have an adjusted basis of 5,000 and are sold for 4,000, producing a 1,000 loss, or 10 per share. Ten days later, 40 substantially identical shares are purchased.
In a simplified share-by-share match, 40 × 10 = 400 of loss is disallowed now. The remaining 600 may remain recognized, subject to the rest of the tax rules. For a taxable-account replacement, the 400 is generally added to the basis of the matched replacement shares, and the holding-period rules also require attention.
The conceptual formula is:
Replacement-share adjusted basis = replacement purchase basis + matched disallowed loss.
If the 40 replacement shares cost 1,720, the simplified adjusted basis becomes 2,120, or 53 per share. This defers the matched loss rather than necessarily erasing it. Partial quantities, multiple purchases, multiple sales, and different per-share losses require an ordered lot-level schedule, not an average shortcut.
IRA purchases are a high-risk boundary
IRS guidance describes special treatment when an individual sells stock or securities at a loss and an IRA or Roth IRA acquires substantially identical property during the period. Do not assume the disallowed loss is added to IRA basis the same way as a taxable-account replacement. The economic loss may not produce a later usable deduction.
That asymmetry makes an automatic IRA purchase especially important to catch before a taxable loss sale. Review scheduled retirement contributions, managed-account trades, and target-allocation rebalancing rather than looking only for a manual order with the same ticker.
A spouse and multiple brokers can change the return
Publication 550 describes acquisitions by a spouse as relevant in applying the rule. Household tax filing, ownership, and facts can be complex, so coordinate the timeline even when accounts are individually titled. A broker tax statement that shows no wash-sale adjustment is not affirmative proof that no cross-account wash sale exists.
The reverse is also possible: a broker can report an adjustment based on information it has, while your records show a later disposition or other fact needed to finish the tax reporting. Reconcile each broker document with a single household ledger and Form 8949 treatment.
“Substantially identical” is not a ticker test
Buying the exact same stock is the clearest case. Different share classes, options or contracts to acquire stock, reorganizations, and closely related securities can require further analysis. For funds, two products may have similar exposure without a definitive rule that every pair tracking the same or related indexes is, or is not, substantially identical.
Do not publish or rely on a universal substitution list. Compare index methodology, holdings, weighting, legal rights, fund structure, and the actual authority available. When the tax result is material, select a clearly differentiated replacement or obtain a defensible professional opinion. The fund structure comparison can organize those facts but does not decide the tax identity question.
A practical control system
Maintain a ledger with taxpayer or owner, account, security, trade date, acquisition date, quantity, lot basis, loss per share, replacement match, disallowed amount, new basis, holding-period carryover, and source document. Pause automatic reinvestment early enough when planning loss harvesting. After the window closes, reconcile trade confirmations and tax forms.
For employer shares, integrate vesting and purchase events from the RSU and ESPP basis workflow. A payroll or plan acquisition can occur even when no cash transfer appears in the brokerage history.
Turn the page into action
Review a loss sale across accounts
- Identify the exact loss lots and loss per share.
- Search 30 days before and after the sale using actual dates.
- Include every broker, spouse, IRA, managed account, and reinvestment plan.
- Match replacement quantities to loss shares at lot level.
- Calculate disallowed loss, new basis, and holding-period treatment.
- Treat IRA replacement purchases as a special escalation point.
- Document why a replacement security is or is not substantially identical.
- Reconcile broker forms to the household ledger before filing.
Boundaries
This is a general U.S. federal framework, not tax advice. Dealer rules, options, short sales, constructive transactions, digital assets, business entities, trusts, community-property issues, nonresident status, Puerto Rico, and non-U.S. systems can differ. Consult the current IRS material and qualified tax counsel for material or ambiguous transactions.
Evidence to action
Methods and evidence
Methods used
- Wash-sale replacement basis
replacement basis = replacement cost + disallowed loss, except where special account rules prevent the adjustment - Taxable gain by lot
gain or loss = net proceeds − adjusted basis of the shares sold
Next actions
Structured datasources.jsonformulas.jsonsystems.json
Evidence
Sources
- Publication 550: Investment Income and Expenses
irs-pub-550Internal Revenue ServiceAccessedSeptember 1, 2026
- Instructions for Form 8949
irs-form-8949-instructionsInternal Revenue ServiceAccessedSeptember 1, 2026
Common questions
Frequently asked questions
Can a purchase at another broker create a wash sale?
Yes. The U.S. rule is not confined to the account or broker where the loss sale occurs. The taxpayer must examine purchases of substantially identical stock or securities across relevant accounts during the applicable window.
Can dividend reinvestment trigger a wash sale?
An automatic reinvestment can acquire replacement shares during the wash-sale window. Small purchases can cause a proportional rather than all-or-nothing adjustment, so include scheduled reinvestment in the timeline.
What happens when the replacement purchase is in an IRA?
IRS guidance describes special treatment when an individual sells at a loss and an IRA or Roth IRA acquires substantially identical stock or securities. Do not assume the loss simply moves into IRA basis; review the current rule with a qualified tax professional.
Are two funds that track the same index substantially identical?
The statute and IRS guidance do not provide a simple product-name test for every fund pair. Holdings, index, structure, rights, and facts matter. Avoid claiming certainty for a close substitution without authoritative support.
