The wash-sale rule, explained for active traders
By the Wash-Sale Guardian team · Published 2026-07-12 · Last updated 2026-07-14 · How we check our facts
Short answer: if you sell a security at a loss and acquire a substantially identical one within 30 days before or after the sale — a 61-day window — IRC §1091 disallows the loss for that year. The disallowed amount moves into the replacement shares' basis (so it's usually deferred, not destroyed), the window spans all your accounts, and your broker only tracks the same-account slice of it.
The mechanics that bite people
- The window runs both directions. Buying on day −30 washes a sale just as surely as buying on day +30 — "I bought the dip first, then harvested the older lot" is still a wash. Full timeline on our 61-day window page.
- The loss usually defers, not disappears. Per IRS Pub 550, the disallowed loss is added to the replacement lot's basis and the old holding period tacks on. Sell the replacement later, outside a new window, and you get the loss back. The brutal exception is the IRA trap, where it's gone forever.
- Deferrals compound for active traders. Keep re-buying the same ticker and each wash rolls the loss forward into the next lot. Across a year of trading this is how a 1099-B can show large taxable "gains" while the account is deep in the red — the pattern behind the famous $800k tax bill on $45k of profit. See what "wash sale loss disallowed" on your 1099-B actually means.
- Partial re-buys wash partially. Sold 100 at a loss, re-bought 40? Forty shares' worth is disallowed, sixty is fine. Replacement shares are matched earliest-first and each share replaces only one loss (Pub 550's matching-order examples).
- Options and DRIPs count. §1091(a) includes "a contract or option to acquire" the stock; dividend reinvestments, ESPP purchases, and auto-invest are all acquisitions.
- "Substantially identical" is broader than "the same ticker" in edge cases (options on the stock; possibly near-identical index funds). Our substantially-identical explainer covers where the bright lines end.
What your broker does — and doesn't — track
Brokers report wash sales on the 1099-B only for identical securities inside the same account. Across brokers, across your IRA, across spouses — that's your job, on Form 8949 with code W. This gap is big enough that we wrote a dedicated guide: wash sales across accounts.
How to stay out of trouble
Know your open windows before you re-buy — in every account. That's the entire point of Wash-Sale Guardian: drop broker CSVs (all accounts), see every open 30-day danger window with its exact safe date and every violation already incurred — locally in your browser, free, no signup, no account linking. How it decides is public on the methodology page.
Frequently asked questions
How long is the wash sale window?
61 days total: the 30 days before the loss sale, the sale day itself, and the 30 days after (IRC §1091). Buying substantially identical securities anywhere in that span — in any of your accounts — disallows the loss. Day 31 after the sale is the first safe re-buy date.
Is a wash sale loss lost forever?
Usually no: the disallowed loss is added to the cost basis of the replacement shares and the holding period tacks on, so you recover it when you later sell the replacement cleanly. The exception is a replacement purchase inside an IRA, where the loss is permanently gone (Rev. Rul. 2008-5).
Do dividend reinvestments trigger wash sales?
Yes. A DRIP purchase is an acquisition. If a dividend reinvestment buys substantially identical shares within the 61-day window of your loss sale — in any account, including an IRA — it washes that portion of the loss.
Do options count for the wash sale rule?
Yes. IRC §1091(a) covers acquiring "a contract or option to acquire" the stock, so buying a call after selling shares at a loss is a statutory wash sale. Re-buying the same option contract after closing it at a loss also washes.