Wash Sale Rule Calculator

The wash sale rule (IRC §1091) is one of the most commonly triggered and least understood provisions in US individual income tax law. Enacted in 1954 and codified at Section 1091 of the Internal Revenue Code, the rule prevents a specific form of artificial tax loss manufacturing: selling a security to realize a deductible loss on Schedule D, then immediately repurchasing the same security to maintain your market position. In Congress's view — and in the IRS's enforcement posture — this sequence produces a loss on paper without any real change in your economic position. The rule disallows the tax deduction until you have a genuine period without holding the security. For US investors filing their annual return, understanding exactly how the disallowance works, how it interacts with your cost basis, and what the IRA trap looks like can make the difference between a correct Schedule D and an amended return.

The 61-Day Window: How the IRS Counts It

The wash sale window is commonly described as "30 days before or after the sale," but the technically accurate statement is more precise: the restricted period runs from the 30th calendar day before the loss sale through the 30th calendar day after the loss sale — a total of 61 days inclusive of the sale date itself. If you sell on December 10, the window runs from November 10 through January 9.

The IRS uses calendar days, not trading days. This is a critical distinction that many investors get wrong. The Saturday after a Friday loss sale counts. The day after Thanksgiving counts. The day the market was closed for a presidential funeral counts. If day 30 falls on a Sunday and you repurchase on Monday (day 31), you are outside the window and the rule does not apply. If you repurchase on that same Sunday (because your broker supports after-hours orders that settle Monday), the controlling date is typically the trade date, not the settlement date. The trade date is what appears on your brokerage confirmation and what the IRS treats as the purchase date for wash sale purposes.

The pre-sale 30-day lookback catches a pattern that surprises many investors using dollar-cost averaging strategies: averaging down into a losing position. Suppose you bought 100 shares of a stock at $180 six months ago. The stock has fallen to $145. On December 10, you buy another 100 shares at $145 (averaging down). On December 15, you sell your original 100 shares at $145 to realize the $35/share loss for tax purposes. The December 10 purchase — five days before the sale — falls inside the 30-day pre-sale window. The loss on your original 100 shares is fully disallowed. You intended to harvest a tax loss; instead, you triggered a wash sale by the averaging-down purchase you made first. Many US investors who actively manage individual stock positions in taxable accounts hit this pattern without realizing it.

Calculating the Disallowed Loss: The Pro-Rata Rule

One of the most important — and underused — mechanics of the wash sale rule is that disallowance is proportional to the number of replacement shares, not automatic on the entire loss. The IRS applies disallowance only to the shares that were actually repurchased within the window, capped at the number sold at a loss. This creates genuine planning flexibility.

The formula: Disallowed loss = min(shares repurchased within window, shares sold at a loss) × loss per share. The deductible loss is the total loss minus the disallowed portion. Example: you sold 200 shares of AAPL at a $25/share loss (total: $5,000 loss) and repurchased 80 shares within 30 days at $155/share. Disallowed loss = 80 × $25 = $2,000. Deductible loss on this year's Schedule D = $3,000 (the remaining 120 shares × $25). The $2,000 is deferred into the adjusted basis of the 80 replacement shares, not permanently lost.

This proportionality means that investors can structure partial repurchases strategically. If you want to maintain some market exposure but still claim a partial deduction, repurchasing fewer shares than you sold while staying inside the window preserves a portion of the current-year deduction. Whether this makes sense depends on your capital gains situation elsewhere in your portfolio — if you have large capital gains to offset, maximizing the current-year deduction by staying out of the window entirely may be preferable to a partial repurchase strategy.

Adjusted Cost Basis: How the Deferred Loss Carries Forward

When a wash sale is triggered in a taxable brokerage account, the disallowed loss per share is added to the repurchase price to create the adjusted cost basis of the replacement shares. This is the deferral mechanism: the tax loss is not extinguished — it is postponed and embedded in the new position's basis, where it will be recognized when those replacement shares are eventually sold outside a wash sale window.

Continuing the example: 80 replacement shares purchased at $155. Disallowed loss per share: $25. Adjusted basis: $155 + $25 = $180 per share. Total adjusted basis for 80 shares: $14,400. When you sell those 80 shares later — say at $200 — your capital gain is ($200 − $180) × 80 = $1,600, not ($200 − $155) × 80 = $3,600. The $2,000 deferred loss has effectively reduced your future capital gain by the same amount. Over time, the full economic loss is recognized — just not in the current tax year.

The critical tax administration point: your broker may or may not update the cost basis on your 1099-B to reflect the wash sale adjustment. For wash sales within the same account, most major brokers (Fidelity, Schwab, Vanguard, TD Ameritrade/Schwab) do track and report the adjusted basis automatically in Box 1e of the 1099-B. However, if the replacement purchase occurs in a different brokerage account — or in your spouse's account — the broker has no visibility into the wash sale across accounts and will not adjust the basis. You must track this manually and make the Form 8949 adjustment yourself. This cross-account tracking failure is a significant source of errors in US investor tax returns.

Holding Period Inheritance: The Often-Overlooked LTCG Benefit

Under IRC §1091(d), replacement shares inherit the holding period of the original shares sold at a loss. The IRS "tacks on" the original holding period, meaning the replacement shares are treated as if you had purchased them on the original purchase date, not the repurchase date. This rule exists to prevent taxpayers from using the wash sale mechanism to reset a short-term position into a long-term one — but it also creates an unintended benefit when you held the original shares for close to (but less than) 12 months.

Example: you bought 100 shares on February 1, 2024. By December 1, 2024 (10 months into the position), the stock has fallen and you sell at a loss, triggering a wash sale by repurchasing on December 15. For long-term capital gains, you need 12 months from the original purchase date. Your replacement shares inherit the February 1, 2024 purchase date. To reach the 12-month mark, you only need to hold the replacement shares until February 2, 2025 — just 49 days from your December 15 repurchase. Without the holding period inheritance rule, you would need to hold from December 15 for a full year, until December 15, 2025. The inherited holding period saves you approximately 10 months of additional hold time.

For US investors in the 32%+ federal bracket, the difference between short-term (ordinary income) and long-term (15% or 20%) capital gains rates on the same dollar amount of gain can be 12%–22%. Knowing that your replacement shares inherit the original holding period lets you plan the minimum hold period to qualify for long-term treatment rather than guessing or over-holding out of caution.

The IRA and Roth IRA Trap: When Deferral Becomes Permanent Loss

The most costly wash sale scenario for US individual investors involves a repurchase inside a retirement account. The rule is straightforward but its consequences are severe: if you sell a security at a loss in a taxable brokerage account and repurchase the same or substantially identical security in a traditional IRA or Roth IRA within the 61-day window, the loss is permanently disallowed. Not deferred — permanently lost. The reason: IRAs are tax-sheltered accounts that do not track cost basis or recognize capital gains and losses. There is no mechanism to add the disallowed loss to an IRA's adjusted basis, because IRA positions have no recognized basis for capital gain purposes. The deferred-loss basis mechanism that applies in taxable accounts simply does not exist inside an IRA.

This trap catches investors in a specific scenario: sell 200 shares of VOO in your taxable Fidelity account at a $4,000 loss on December 8 to harvest the loss before year-end. On December 12, buy 200 shares of VOO in your Roth IRA to "maintain market exposure" during the wash sale wait period. The loss from the taxable sale is permanently disallowed — $4,000 gone. The Roth IRA shares have no adjusted basis, and when those shares are later sold at a profit inside the Roth, the gain is tax-free (as Roth gains always are) — but the $4,000 disallowed loss provides no future tax benefit anywhere.

The IRA trap also extends to your spouse's IRA. If you sell at a loss in your taxable account and your spouse purchases the same security in their IRA within the 61-day window, the wash sale rule applies and your loss is disallowed. The IRS treats spousal accounts as part of the same household for wash sale purposes. This is documented in IRS Publication 550, Chapter 4. Many married couples who coordinate their December tax-loss harvesting activities unknowingly trigger this rule when one partner's IRA rebalancing purchase coincides with the other's taxable loss harvesting sale.

Reporting Wash Sales on Form 8949 and Schedule D

Wash sales are reported on Form 8949, Part I (short-term) or Part II (long-term), depending on the holding period. Your broker will report wash sale adjustments on Form 1099-B, Box 1g ("Wash sale loss disallowed"), for wash sales within the same account. On Form 8949, the mechanics are: Column (d) shows gross proceeds. Column (e) shows your original cost basis. Column (g) shows the wash sale disallowance as a positive number (reducing the deductible loss). The net result flows to Column (h), which reflects the actual deductible loss after the §1091 adjustment. This net deductible loss transfers to Schedule D, Line 1b (short-term, covered) or Line 8b (long-term, covered).

For cross-account wash sales not captured on your 1099-B, you must identify the transactions manually and make the adjustments on Form 8949 yourself. Use column (g) to note both the disallowed amount (reducing the loss) and, for the replacement shares in the other account, note the basis adjustment via a separate Form 8949 entry. The IRS instructions for Form 8949 provide the technical treatment, and IRS Publication 550 (Investment Income and Expenses) contains the definitive wash sale guidance including examples. If your wash sale situation involves multiple lots, different accounts, or a spouse's account, having a CPA or enrolled agent prepare the Schedule D section of your return is advisable for the year the wash sale occurred.

Tax-Loss Harvesting Without Triggering the Wash Sale Rule

Year-end tax-loss harvesting is a legitimate and widely practiced strategy for US investors in taxable brokerage accounts. The goal is to realize losses that offset capital gains (and up to $3,000 of ordinary income annually, with excess carried forward indefinitely). The wash sale rule is the primary constraint on this strategy, but it does not prevent tax-loss harvesting — it just requires a 31-day waiting period or a switch to a non-identical security.

The two main approaches: (1) Wait 31 days, then repurchase. Sell the losing position, accept 31 calendar days of market exposure risk, then repurchase the same security. This is simple and avoids any substantially identical security question — but it leaves you out of the market during the waiting period, which could matter if the security or its sector moves significantly. Use the safe repurchase date shown by this calculator to plan the exact earliest repurchase date without guessing.

(2) Immediately buy a similar but not identical security. Sell SPY at a loss, immediately buy IVV (iShares S&P 500). Both track the S&P 500, but most tax practitioners consider them not substantially identical because they are issued by different entities (State Street vs. BlackRock) with different fund structures. After 31 days, you can sell IVV and buy SPY back if you prefer. Similarly: sell an individual stock at a loss, immediately buy a diversified ETF in the same sector. The ETF represents many companies and is generally not considered substantially identical to any single stock. Selling NVDA at a loss and buying SMH (VanEck Semiconductor ETF) is the kind of switch most CPAs consider safe — SMH holds 25+ semiconductor companies, and NVDA is roughly 20% of the ETF, making the ETF not "substantially identical" to a single-name position.

What you should not do: sell VOO and immediately buy SPY. The IRS has not ruled definitively, but the risk that these two funds — which both track the S&P 500 index with near-identical compositions and daily price correlation above 0.999 — are considered substantially identical is real enough that most CPAs advise against the swap. The "different issuer" argument has merit but is not settled law. When the potential wash sale disallowance is large (say, $20,000+), the downside of an IRS challenge outweighs the convenience of staying in a nearly identical fund.