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Wash-Sale Rule: Definition, 61-Day Window, Cost Basis Adjustments & Examples
Comprehensive guide to the IRS wash-sale rule — Section 1091 mechanics, 61-day window calculations, cost basis adjustments, and tax-loss harvesting compliance.
By Maya Lin-Donahue, CPA, MST • Reviewed by Harold Zimmerman, CPA • November 4, 2026
Key Takeaways
- Under IRC Section 1091, capital losses are disallowed if replacement shares are acquired within 30 days before or after the sale date.
- The disallowed loss is not permanently forfeited; it is added to the cost basis of the newly acquired replacement shares.
- The holding period of the original sold shares tacks onto the holding period of the replacement shares for long-term capital gains classification.
- Triggering a wash sale by repurchasing shares inside an IRA permanently destroys the tax loss, creating a severe tax trap under Revenue Ruling 2008-5.
2026 Tax Benchmarks IRS Thresholds
Long-Term Capital Gains 0% Bracket Up to $47,025
Single Filer $94,050 Married Joint
Net Capital Loss Deduction $3,000 / Year
Ordinary Income Offset Indefinite Carryforward
NIIT Investment Surtax 3.8%
Threshold $200k Single / $250k Joint
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Wash-Sale Rule: Definition, 61-Day Window, Cost Basis Adjustments & Examples
Comprehensive guide to the IRS wash-sale rule — Section 1091 mechanics, 61-day window calculations, cost basis adjustments, and tax-loss harvesting compliance.
By Maya Lin-Donahue, CPA, MST