Wash Sales

A wash sale occurs when you sell or otherwise dispose of stock or securities (including a contract or option to acquire or sell stock or securities) at a loss and, within 30 days before or after the sale or disposition, you:

Buy substantially identical stock or securities,

Acquire substantially identical stock or securities in a fully taxable trade,

Enter into a contract or option to acquire substantially identical stock or securities, or

Acquire substantially identical stock or securities for your individual retirement arrangement (IRA) or Roth IRA.

You can’t deduct losses from wash sales unless the loss was incurred in the ordinary course of your business as a dealer in stock or securities. The basis of the substantially identical property (or contract or option to acquire such property) is its cost increased by the disallowed loss (except in the case of (4) earlier).

These wash sale rules don’t apply to a redemption of shares in a floating-NAV (net asset value) money market fund.

The wash sale rules generally apply to transactions involving digital assets that are also stock or securities for tax purposes (tokenized securities).

If you received a Form 1099-B or Form 1099-DA (or substitute statement), box 1g of Form 1099-B or box 1i of Form 1099-DA will generally show whether there was any nondeductible wash sale loss and its amount if:

The stock or securities sold were covered securities (defined in the Instructions for Form 8949, column (e)), and

The substantially identical stock or securities you bought had the same CUSIP number as the stock or securities you sold and were bought in the same account as the stock or securities you sold. (CUSIP numbers are security identification numbers.)

Report a wash sale transaction in Part I or Part II (depending on how long you owned the stock or securities) of Form 8949 with the appropriate box checked. Complete all columns. Enter “W” in column (f). Enter as a positive number in column (g) the amount of the loss not allowed. See the Instructions for Form 8949, columns (f), (g), and (h).