![\"wash](\"https:\/\/www.hrblock.com\/tax-center\/wp-content\/uploads\/2019\/01\/wash-sale-taxes.jpg\")
<\/figure><\/div>\n\n\nSpecifically, the following situations count as a wash sale:<\/p>\n\n\n\n
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- You sell or trade stock, mutual fund shares, or bonds at a loss.<\/li>\n\n\n\n
- Within 30 days before or after the sale date, you:\n
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- Buy substantially identical stock or securities<\/li>\n\n\n\n
- Acquire substantially identical stock or securities in a fully taxable trade<\/li>\n\n\n\n
- Acquire a contract or option to buy substantially identical stock or securities<\/li>\n\n\n\n
- Acquire substantially identical stock for your Traditional or Roth IRA<\/a>.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n
If you have a loss from a wash sale, you can\u2019t deduct the loss on your return. Instead, the disallowed loss is added to the cost basis of the new stock or securities. However, a gain on a wash sale is taxable.<\/p>\n\n\n\n
You also have a wash sale if both of these apply:<\/p>\n\n\n\n
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- You sell stock at a loss.<\/li>\n\n\n\n
- Your spouse \u2014 or a corporation you control \u2014 buys substantially identical stock within the 30 days before and after the date of the sale.<\/li>\n<\/ul>\n\n\n\n
What if you don\u2019t buy back the same number of shares? If you buy fewer shares of stock or securities than you sold, the number of shares you bought is subject to the wash-sale rules.<\/p>\n\n\n\n
Why do wash sale rules exist?<\/h2>\n\n\n\n
The wash sale rules are designed to prevent people from selling investments and then buying the same stock back.<\/p>\n\n\n\n
Some investors attempt to do this for the purpose of:<\/p>\n\n\n\n
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- Creating a deductible loss<\/li>\n\n\n\n
- Using the loss to offset other shares sold for a gain<\/li>\n\n\n\n
- Still keeping the stock or security in their investment portfolio<\/li>\n<\/ul>\n\n\n\n
However, you can\u2019t sell stock or mutual fund shares at a loss and then buy them again within 30 days just to claim the losses. If you do have a wash sale transaction, you\u2019ll still need to report it.<\/p>\n\n\n\n
What information do I need to report a wash sale? <\/h2>\n\n\n\n
1. Details of the original sale at a loss<\/strong><\/p>\n\n\n\n
You\u2019ll need:<\/p>\n\n\n\n
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- Date you sold the security<\/li>\n\n\n\n
- Number of shares \/ units sold<\/li>\n\n\n\n
- Sale proceeds<\/li>\n\n\n\n
- Cost basis before any wash\u2011sale adjustment<\/li>\n<\/ul>\n\n\n\n
This is the basic information needed to determine whether the original transaction produced a loss.<\/p>\n\n\n\n
2. Dates and details of any repurchase (the \u201creplacement shares\u201d)<\/strong><\/p>\n\n\n\n
To determine whether the 30\u2011day rule applies, gather:<\/p>\n\n\n\n
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- Purchase date(s) of substantially identical stock, ETF, mutual fund shares, etc.<\/li>\n\n\n\n
- Number of replacement shares purchased<\/li>\n\n\n\n
- Whether the security is \u201csubstantially identical\u201d (e.g., buying the same stock, equivalent ETF, shares acquired via option, etc.)<\/li>\n<\/ul>\n\n\n\n
How to report wash sales on taxes<\/h2>\n\n\n\n