Wash Sale Rule: The 61-Day Window, Explained in Plain English

Last reviewed October 29, 2026. For education only, not tax, legal or investment advice.

That paragraph is what most explainers stop at. The rule itself fits in a sentence. The trouble is the calendar, the accounts you forgot about, the automatic purchases you never placed by hand, and the broker form that only sees part of the picture. This page works through each of those with real 2026 dates and real arithmetic.

What the rule actually says

Section 1091 of the Internal Revenue Code disallows a loss on stock or securities when, within the period running from 30 days before the sale to 30 days after it, you acquire substantially identical stock or securities, or enter into a contract or option to acquire them. IRS Publication 550 turns that into four triggers. Within 30 days before or after the loss sale, you:

1. buy substantially identical stock or securities,
2. acquire them in a fully taxable trade,
3. acquire a contract or option to buy them, or
4. acquire them for your IRA or Roth IRA.

Then one more sentence adds a fifth: if your spouse or a corporation you control buys substantially identical stock, you also have a wash sale.

Three things the rule does not do. It never touches gains; sell at a profit and buy back the same afternoon, and nothing happens. It usually doesn’t destroy the loss, either. The disallowed amount moves into the cost basis of the replacement shares and comes back when you sell those. And it ignores calendar years entirely, which is how December sellers get hurt.

Counting the 61 days on a real calendar

Take one sale and follow it through. You bought 100 shares on Friday, March 13, 2026, at $62.40, for $6,240. On Thursday, October 29, 2026, you sell all 100 at $48.15, for $4,815. The loss is $1,425.

You can run any sale date through the wash sale calculator and get the same dates, holidays included.

Weekends and holidays move your first trade, never the window

The statute counts days, not trading days. Weekends and market holidays sit inside the window like any other day. They don’t stretch it and they don’t shrink it. All they do is push your first usable trading day later, the way Thanksgiving weekend does above: the law says Sunday the 29th, the market says Monday the 30th.

The same logic works in reverse. If your 30th day lands on a Saturday, the window still ends that Saturday. It doesn’t roll forward to Monday.

Trade date, not settlement date

Every date in the rule is a trade date: the day your order executed, as printed on the confirmation. Pub 550 says it plainly for holding periods (they run from the day after the trade date you bought to the trade date you sold) and warns against mixing up trade date and settlement date. With T+1 settlement, the Oct 29 sale settles Oct 30. That changes nothing. Day zero is October 29.

Two practical wrinkles. Pre-market and after-hours fills keep that calendar day. Orders filled in an overnight session (roughly 8 p.m. to 4 a.m. ET) are usually booked to the next trading day, so the confirmation, not the clock on your phone, decides.

What a wash sale costs: basis and holding period

The basis adjustment

Say that on Friday, November 20 (day +22), the stock looks cheap at $50.30 and you buy the 100 shares back for $5,030. The October 29 loss is washed. The bookkeeping:

• Disallowed loss: $1,425. The sale still goes on your 2026 return; the loss just isn’t deducted.
• Basis of the new shares: $5,030 + $1,425 = $6,455, or $64.55 a share.
• Later sale: sell those shares at $55.00 ($5,500) and you report a $955 loss. That is the original $1,425 minus the $470 you made on the rebuy.

Pub 550’s own example has the same shape: 100 shares bought for $1,000, sold for $750, 100 bought back within 30 days for $800. The $250 loss is disallowed and the new basis is $1,050.

The holding period comes along too

The second adjustment gets less attention. Under IRC §1223(3) (you’ll still see it cited as §1223(4), its old number), the replacement shares’ holding period includes the time you held the shares you sold.

In the example, the March 13 shares had been held 230 days by October 29. The November 20 shares start life with those 230 days already counted. A common way to apply this, and the way many brokers display it, is to slide the original acquisition date forward by the 22 days you were out of the stock: March 13 becomes April 4, 2026. On that reading the new lot turns long-term for sales on or after Monday, April 5, 2027. Without tacking it wouldn’t get there until late November 2027.

The IRS doesn’t publish a date formula for tacked lots, so treat your broker’s adjusted date as the working number and check it against this logic. The point that matters: when the deferred loss finally comes back, its character (short-term or long-term) follows the combined holding period, and character decides which gains it offsets first.

The 30-days-before trap

Ask most investors about the wash sale rule and they’ll describe the 30 days after. The 30 days before catch more people, because the trigger has already happened by the time you sell.

The classic setup is averaging down. You bought 100 shares on Wednesday, January 14, 2026, at $80.00. By autumn the stock is in the low $50s, so on Monday, October 5, you add 100 shares at $52.00. On Thursday, October 29, you sell 100 shares at $48.15, and your broker’s default lot method (first in, first out, at many brokers) picks the January shares. Loss: ($80.00 − $48.15) × 100 = $3,185.

That loss is washed. The October 5 lot was bought on day −24, inside the window, and it’s still in the account. Treasury Regulation §1.1091-1(h), Example 1, is exactly this pattern. The $3,185 moves into the October 5 shares, which now carry a basis of $5,200 + $3,185 = $8,385 ($83.85 a share).

Two other orders on the same day would have played out differently:

• Sell the October 5 lot instead (specific identification). Loss: ($52.00 − $48.15) × 100 = $385. Not washed: the January shares were bought long before the window opened, and a lot can’t be its own replacement. The larger January loss stays on paper.
• Sell all 200 shares. The numbers net out. The January loss rides into the October 5 lot’s basis, and that lot is sold the same day for a $3,570 loss ($8,385 − $4,815). Total recognized: $3,570, the same as $3,185 + $385, as long as nothing is bought back by November 28.

The lesson isn’t “never average down.” It’s that the moment you add shares, you’ve set a 30-day fuse on every loss in that position.

Partial washes, multiple lots and partial fills

The rule works share by share. When the number of shares you buy in the window doesn’t match the number you sold, Pub 550 (“More or less stock bought than sold”) and Treas. Reg. §1.1091-1(c) and (d) match them up: shares bought are matched to shares sold in the order they were bought, earliest first. Buy back fewer shares than you sold and only that fraction of the loss is washed. Sell 300 at a $1,800 loss, buy back 100, and $600 is disallowed while $1,200 stays deductible.

More shares bought than sold

On Monday, November 2, 2026, you sell 300 shares at $40.00 that cost $46.00. Loss: $1,800, or $6 a share. The window runs to Wednesday, December 2, and inside it you buy:

Every sold share finds a match, so the full $1,800 is disallowed, $6 per matched share. The last purchase splits in two: 50 matched shares with a basis of $48.00 each and 50 unmatched shares at their plain $42.00 cost, each half with its own holding period. One order, two tax lots. Your broker tracks that inside one account. Across accounts, you do.

Two loss sales, one rebuy

You sell 100 shares at a $500 loss on Monday, November 2, and another 100 at a $700 loss on Monday, November 16. On Wednesday, November 25, you buy 100 shares. That purchase sits inside both windows (the first runs to December 2, the second to December 16), but it doesn’t wash both.

Treas. Reg. §1.1091-1(b) applies the rule to losses in the order of the sales, earliest first. Section 1.1091-1(e) adds that a share whose purchase already washed one loss is disregarded for any other. So the November 2 loss of $500 is disallowed and moves into the November 25 shares. The November 16 loss of $700 stands.

Partial fills at the edge of the window

Each fill is its own acquisition with its own trade date. Back to the October 29 sale: a good-’til-canceled limit order to buy 100 shares fills 60 shares on Friday, November 27 (day +29) and the last 40 on Monday, November 30 (day +32). Sixty shares washed, forty clean. Sixty percent of the $1,425 loss, $855, is disallowed; $570 stays deductible. A resting order doesn’t check the calendar for you.

Dividend reinvestment: the wash nobody schedules

An automatic dividend reinvestment is a purchase. If the stock or fund pays inside your window and the dividend is reinvested in any account you or your spouse own, the new shares wash part of the loss. Monthly and weekly payers almost always pay inside a 61-day window, and many funds make their largest distributions in December.

Here is how it plays out with a monthly payer. You own 500 shares of a fund in two lots: 300 bought in February 2026 at $54.00 and 200 bought in August 2024 at $41.00. The fund pays $0.38 a share each month, reinvested on the pay date.

• Fri Oct 30: $190.00 (500 × $0.38) reinvests at $47.50, buying 4.000 shares.
• Wed Nov 4: you sell the 300-share February lot at $46.50. Loss: $7.50 × 300 = $2,250. Window: Mon Oct 5 to Fri Dec 4.
• Mon Nov 30: $77.52 (204 × $0.38) reinvests at $48.45, buying 1.600 shares.

Both reinvestments fall inside the window: 5.6 replacement shares. Disallowed: 5.6 × $7.50 = $42.00. Deductible: $2,208.00. The October 30 shares’ basis becomes $220.00 ($190.00 + $30.00) and the November 30 shares’ becomes $89.52 ($77.52 + $12.00).

Forty-two dollars isn’t a disaster. The paperwork is: one clean line on Form 8949 becomes a W-coded partial wash with two fractional replacement lots. Two variations make it worse. If the 200-share lot sits in an IRA with reinvestment on, the same $42 is lost outright (next section). And with a weekly payer the window can hold eight or nine reinvestments.

Notice the October 30 purchase. It happened before the sale. Switching reinvestment off on the day you sell fixes only the forward half of the window; the look-back half needs a month of lead time.

IRAs: where a wash sale becomes a permanent loss

Rev. Rul. 2008-5 (2008-3 I.R.B.) closed a gap people had been using: sell at a loss in a taxable account, buy the same stock in the IRA, keep the position and the deduction. The ruling’s facts are simple. An individual sells 100 shares with a $1,000 basis for $600 on December 20, 2007, then has his IRA buy 100 shares of the same stock the next day. The IRS held two things. The loss is disallowed under §1091. And the IRA’s basis is not increased under §1091(d).

That second holding is the whole story. A normal wash parks the loss in the replacement shares’ basis. Inside an IRA there’s no basis you’ll ever deduct against, so the parked loss has nowhere to go.

You sell 200 shares in a taxable account on Monday, November 9, 2026, at a $10-a-share loss ($2,000). On Friday, November 20, your IRA’s automatic monthly investment buys 50 shares of the same fund. Fifty of 200 shares are washed: $500 of the loss is disallowed and, because the replacement sits in the IRA, never comes back. The other $1,500 is deductible.

What the ruling doesn’t settle

Rev. Rul. 2008-5 addresses your own traditional or Roth IRA. Two close cousins have no ruling:

• Your spouse’s IRA. Pub 550 treats a spouse’s purchase as yours, and the ruling’s reasoning carries over cleanly, so most practitioners treat it the same way. It just hasn’t been tested in a ruling.
• 401(k) and 403(b) plans. The ruling turns on the individual having caused the account to buy. A participant-directed 401(k) buying the same fund fits that uncomfortably well. No ruling either way. Treat it as a risk, not a loophole.

Your spouse, and companies you control

Pub 550’s spouse sentence has no exception for couples who file separately. In practice the window covers the household: your brokerage accounts, your spouse’s, your IRAs (and, on the cautious reading, your spouse’s), and any corporation you control.

Custodial accounts for children and trusts you direct aren’t named in Pub 550. But Rev. Rul. 2008-5 leans on a 1933 case, Security First National Bank, where a loss was disallowed because a trust the taxpayer controlled made the purchase. Control is the thread. The cautious reading treats any account you direct as yours.

Options, funds and “substantially identical”

The statute never defines “substantially identical,” and the IRS has never published a list. Pub 550 says to look at all the facts and circumstances, and gives a few fixed points.

Options

• Buying a call on the stock you sold at a loss, inside the window, is acquiring an option to buy it. Loss washed. A standard contract covers 100 shares and is generally treated as replacing 100 shares. Using the October 29 sale: buy one call on November 10 for $320, and the $1,425 loss moves into the call, giving it a basis of $1,745. If the call later expires worthless, the full $1,745 becomes a capital loss on the expiration date. The deferred loss comes back then.
• Selling a deep-in-the-money put. In Rev. Rul. 85-87 (1985-1 C.B. 268), a taxpayer sold stock at a loss and the next day sold a put with a strike far above the market price, a put almost certain to be exercised. The IRS treated it as an option to acquire the stock and disallowed the loss.
• Writing a covered call on shares you still hold doesn’t acquire anything. Buying a put is an option to sell, not to buy.
• Losses on the options themselves are covered too: Pub 550 applies the wash sale rules to losses on contracts and options to acquire or sell stock. Rolling a losing contract to a new strike or expiration on the same underlying the same day is the most common source of W codes on active traders’ 1099-Bs. Whether a different strike or expiration is substantially identical has no bright-line answer.

Funds and ETFs

• Different companies: Pub 550 says stock of one corporation ordinarily isn’t substantially identical to stock of another. Selling one bank stock and buying a different bank is ordinarily not a wash.
• Same fund, different wrapper: a mutual fund and its own ETF share class, or two share classes of one fund, hold the same portfolio. Treat them as identical.
• Two funds tracking the same index from different sponsors: the IRS has never ruled. This is the gray zone, and plenty of practitioners steer clear of it.
• Funds tracking different indexes (an S&P 500 fund and a total-market fund, say) are commonly treated as not substantially identical. That’s a widely shared reading, not an IRS safe harbor.
• Convertible preferred: Pub 550 lists five factors (convertible, same voting rights, same dividend restrictions, price tracking the conversion ratio, unrestricted conversion) under which preferred stock counts as identical to the common.

The year-end crossing

The window doesn’t stop at December 31. A loss sale in December and a buy in January within 30 days is a wash, and the loss is disallowed on the return for the year of the sale. Pub 550’s own “loss and gain on same day” example uses exactly that: a sale on December 27, 2024, and a purchase of identical stock on January 10, 2025.

For 2026 the dates fall like this:

November 30 is the last loss-sale date whose window closes inside 2026. From December 2 on, every window ends in January.

The year of the sale itself is set by the trade date. A sale on Thursday, December 31, 2026, settles Monday, January 4, 2027, and is still a 2026 sale; Pub 550 walks through the same case with a December 31, 2025 sale that settled in January 2026. The one exception is covering a short sale at a loss: under Rev. Rul. 2002-44 that loss isn’t realized until the shares are delivered.

Your 1099-B vs. what you actually owe

What box 1g catches

Box 1g of Form 1099-B, “Wash sale loss disallowed,” shows an amount only when the shares you sold were covered securities and the replacement had the same CUSIP and was bought in the same account (Pub 550). That leaves a lot outside the broker’s view:

• buys at a different broker,
• buys in your IRA, Roth IRA or 401(k),
• buys by your spouse,
• a call option on a stock you sold (different CUSIP),
• a different share class of the same fund,
• reinvested dividends in another account.

Pub 550 is blunt about what that means: you can’t deduct a loss from a wash sale even if it isn’t reported on Form 1099-B.

Reporting a wash your broker missed

Use Form 8949. Report the sale as the broker shows it, enter W in column (f), and enter the disallowed amount as a positive number in column (g). In the IRA example above, the 1099-B shows the $2,000 loss and nothing in box 1g. Your 8949 line gets W in column (f) and $500 in column (g), so the loss carried to Schedule D is $1,500. Keep a note of how you got the $500. If the IRS asks, the answer is your record of the IRA purchase, not your broker’s form.

Crypto in 2026: not covered today, maybe retroactively

Status as of October 29, 2026. Check before relying on it.

Under current law the wash sale rule applies to “stock or securities,” and the IRS treats virtual currency as property (Notice 2014-21). Selling bitcoin at a loss and buying it back the same day is not a wash sale under §1091 today.

That may not hold for sales made this season. H.R. 10357, the Digital Asset Tax Certainty Act, cleared the House Ways and Means Committee 38–5 on September 16, 2026. As reported, it would extend §1091 to most traded digital assets (stablecoins meeting the bill’s definition are excluded) for dispositions after September 14, 2026. It has not passed the House or the Senate. If it’s enacted with that date intact, a crypto loss harvested this fall with a quick rebuy could be disallowed after the fact. Effective dates often move before a bill becomes law; this section will be updated if it does.

What the Wash Sale Calculator & Tracker automates

Everything above comes down to date arithmetic plus bookkeeping across accounts. The Wash Sale Calculator & Tracker handles the date half and keeps the ledger:

• The dates, free. Enter the ticker and trade date and it shows the window, the last day a buy washes, the first clean calendar day, and the first day the NYSE is open, with weekends, holidays and 1 p.m. early closes accounted for.
• The look-back and look-forward. Add buys from the 30 days on either side and tag them taxable, IRA/Roth, dividend reinvest or spouse; each one is checked against the window. Shares, price, cost basis, broker and extra buys come with any DRIPCALC plan.
• Options. Call or put, strike, expiration, and whether you bought, sold, rolled or let it expire.
• Cross-checks. Save your trades and every new trade on a ticker is checked against the others, so a buy that would wash an earlier loss shows up in red before you place it. Free keeps your last three trades in the browser; any plan keeps them all in your account.
• A calendar reminder. Download the first clean day as a calendar file.

What it can’t do: decide whether two different funds are substantially identical, see accounts you don’t enter, or stand in for your 1099-B.

Sources

• IRS Publication 550 (2025), chapter 4, “Wash Sales”: irs.gov/publications/p550
• IRC §1091, loss from wash sales of stock or securities: law.cornell.edu/uscode/text/26/1091
• Treas. Reg. §1.1091-1 (order of losses, share matching, examples): law.cornell.edu/cfr/text/26/1.1091-1
• IRC §1223(3), holding period of wash-sale replacement shares: law.cornell.edu/uscode/text/26/1223
• Rev. Rul. 2008-5, 2008-3 I.R.B. (IRA and Roth IRA repurchases): irs.gov/pub/irs-drop/rr-08-05.pdf
• Rev. Rul. 85-87, 1985-1 C.B. 268 (deep-in-the-money puts)
• Rev. Rul. 93-84, 1993-2 C.B. 225 (trade date sets the year of a stock sale) and Rev. Rul. 2002-44 (short sales closed at year end): irs.gov/pub/irs-drop/rr-02-44.pdf
• H.R. 10357, Digital Asset Tax Certainty Act, 119th Congress (introduced text): waysandmeans.house.gov
• NYSE holidays and trading hours: nyse.com/markets/hours-calendars

For education only. Not tax, legal, or investment advice. Verify with IRS Publication 550 or a tax professional before acting.