Wash Sale Rule Explained — Avoid the Trap
The wash sale rule disallows the loss from a security sold and re-bought (or 'substantially identical' security) within 30 days. The disallowed loss is added to the cost basis of the new position. Active traders frequently trigger wash sales without realizing it — automated tax software handles this but can produce surprising year-end results.
The wash sale rule disallows the loss from a security sold and re-bought (or 'substantially identical' security) within 30 days. The disallowed loss is added to the cost basis of the new position. Active traders frequently trigger wash sales without realizing it — automated tax software handles this but can produce surprising year-end results.
What counts as 'substantially identical'
This section covers what counts as 'substantially identical'. For the practical framework, see our Trading Taxes hub and our blog for related analyses. Read on for context-specific guidance.
How brokerages report wash sales
This section covers how brokerages report wash sales. For the practical framework, see our Trading Taxes hub and our blog for related analyses. Read on for context-specific guidance.
Common wash sale traps
This section covers common wash sale traps. For the practical framework, see our Trading Taxes hub and our blog for related analyses. Read on for context-specific guidance.
How to use wash sales strategically
This section covers how to use wash sales strategically. For the practical framework, see our Trading Taxes hub and our blog for related analyses. Read on for context-specific guidance.