What counts as 'substantially identical'? The bright lines and the gray zone

By the Wash-Sale Guardian team · Published 2026-07-14 · Last updated 2026-07-14 · How we check our facts

Short answer: the same ticker is always substantially identical; options on that ticker are statutorily included; different companies' stocks are not identical; and index funds tracking the same index are an unresolved gray zone the IRS has never ruled on. The term comes straight from IRC §1091, and Pub 550 says only that you must "consider all the facts and circumstances."

The bright lines (settled)

Same ticker / same CUSIP: identical. Includes DRIP and auto-invest purchases.
Options to acquire the stock: statutory. Selling shares at a loss and buying a call within the window washes (§1091(a) "contract or option to acquire"). Re-buying the exact same option contract you closed at a loss also washes.
Different companies: not identical, even close competitors — Coke for Pepsi, or one bank for another, is the classic clean harvest swap.
Preferred vs common of the same company: generally NOT identical unless the preferred is convertible and trades in lockstep — a facts-and-circumstances corner worth CPA review.
Bonds: materially different issuer/coupon/maturity = not identical.

The ETF gray zone (unsettled — plan around it)

SPY → VOO, VOO → FXAIX, any S&P 500 fund → another: the IRS has issued no ruling, and practitioner opinion genuinely splits. The aggressive reading says same index + near-perfect correlation = identical; the common practical reading says different issuers, structures, and expense ratios = not identical. What almost everyone agrees on: same-index swaps are the risk, cross-index swaps are the safe pattern — harvest the S&P 500 fund into a total-market or large-cap-value fund and the question disappears.

How our checker treats the gray zone

Deliberately conservatively, and transparently (full methodology): exact matches get full dollar math; stock-loss-then-call-buy is flagged as the statutory violation it is; other same-underlying acquisitions get a caution flag with no invented dollars; and cross-ticker ETF-pair judgments are left to you and your CPA — a judgment call software shouldn't fake. What it WILL catch is the part humans can't: those same-ticker and option matches across every account you own. Check yours free — in your browser, nothing uploaded.

Frequently asked questions

Are SPY and VOO substantially identical for wash sale purposes?

The IRS has never ruled on it. Both track the S&P 500, which makes a strong "identical" argument; they have different issuers and structures, which is the common counter-argument many practitioners accept. It is a genuine gray zone — decide with your CPA and be consistent.

Is selling a stock and buying a call option a wash sale?

Yes — this one is NOT a gray zone. IRC §1091(a) explicitly includes acquiring "a contract or option to acquire" the stock, so a call purchase within the 61-day window washes the stock loss.

Are two S&P 500 index funds from different companies substantially identical?

Unsettled, like SPY vs VOO. The more the funds track the same index with near-identical holdings and performance, the stronger the identical argument. Swapping to a DIFFERENT index (S&P 500 → total market) is the widely used safer harvest pattern.