§1091 — Loss from wash sales of stock or securities
21 cases·2 distinguished·1 criticized·18 cited
Statute Text — 26 U.S.C. §1091
In the case of any loss claimed to have been sustained from any sale or other disposition of shares of stock or securities where it appears that, within a period beginning 30 days before the date of such sale or disposition and ending 30 days after such date, the taxpayer has acquired (by purchase or by an exchange on which the entire amount of gain or loss was recognized by law), or has entered into a contract or option so to acquire, substantially identical stock or securities, then no deduction shall be allowed under section 165 unless the taxpayer is a dealer in stock or securities and the loss is sustained in a transaction made in the ordinary course of such business. For purposes of this section, the term “stock or securities” shall, except as provided in regulations, include contracts or options to acquire or sell stock or securities.
If the amount of stock or securities acquired (or covered by the contract or option to acquire) is less than the amount of stock or securities sold or otherwise disposed of, then the particular shares of stock or securities the loss from the sale or other disposition of which is not deductible shall be determined under regulations prescribed by the Secretary.
If the amount of stock or securities acquired (or covered by the contract or option to acquire) is not less than the amount of stock or securities sold or otherwise disposed of, then the particular shares of stock or securities the acquisition of which (or the contract or option to acquire which) resulted in the nondeductibility of the loss shall be determined under regulations prescribed by the Secretary.
If the property consists of stock or securities the acquisition of which (or the contract or option to acquire which) resulted in the nondeductibility (under this section or corresponding provisions of prior internal revenue laws) of the loss from the sale or other disposition of substantially identical stock or securities, then the basis shall be the basis of the stock or securities so sold or disposed of, increased or decreased, as the case may be, by the difference, if any, between the price at which the property was acquired and the price at which such substantially identical stock or securities were sold or otherwise disposed of.
Rules similar to the rules of subsection (a) shall apply to any loss realized on the closing of a short sale of (or the sale, exchange, or termination of a securities futures contract to sell) stock or securities if, within a period beginning 30 days before the date of such closing and ending 30 days after such date—
substantially identical stock or securities were sold, or
another short sale of (or securities futures contracts to sell) substantially identical stock or securities was entered into.
For purposes of this subsection, the term “securities futures contract” has the meaning provided by section 1234B(c).
This section shall not fail to apply to a contract or option to acquire or sell stock or securities solely by reason of the fact that the contract or option settles in (or could be settled in) cash or property other than such stock or securities.
Treasury Regulations
- Treas. Reg. §Treas. Reg. §1.1091-1 Losses from wash sales of stock or securities
- Treas. Reg. §Treas. Reg. §1.1091-1(a) A taxpayer cannot deduct any loss claimed to have been sustained from the sale or other disposition of stock or securities if, within a period beginning 30 days before the date of such sale or disposition and ending 30 days after such date (referred to in this section as the 61-day period), he has acquired (by purchase or by an exchange upon which the entire amount of gain or loss was recognized by law), or has entered into a contract or option so to acquire, substantially identical stock or sec
- Treas. Reg. §Treas. Reg. §1.1091-1(b) Where more than one loss is claimed to have been sustained within the taxable year from the sale or other disposition of stock or securities, the provisions of this section shall be applied to the losses in the order in which the stock or securities the disposition of which resulted in the respective losses were disposed of (beginning with the earliest disposition).
- Treas. Reg. §Treas. Reg. §1.1091-1(c) Where the amount of stock or securities acquired within the 61-day period is less than the amount of stock or securities sold or otherwise disposed of, then the particular shares of stock or securities the loss from the sale or other disposition of which is not deductible shall be those with which the stock or securities acquired are matched in accordance with the following rule: The stock or securities acquired will be matched in accordance with the order of their acquisition (beginning with th
- Treas. Reg. §Treas. Reg. §1.1091-1(d) Where the amount of stock or securities acquired within the 61-day period is not less than the amount of stock or securities sold or otherwise disposed of, then the particular shares of stock or securities the acquisition of which resulted in the nondeductibility of the loss shall be those with which the stock or securities disposed of are matched in accordance with the following rule: The stock or securities sold or otherwise disposed of will be matched with an equal number of the shares of sto
- Treas. Reg. §Treas. Reg. §1.1091-1(e) The acquisition of any share of stock or any security which results in the nondeductibility of a loss under the provisions of this section shall be disregarded in determining the deductibility of any other loss.
- Treas. Reg. §Treas. Reg. §1.1091-1(f) The word acquired as used in this section means acquired by purchase or by an exchange upon which the entire amount of gain or loss was recognized by law, and comprehends cases where the taxpayer has entered into a contract or option within the 61-day period to acquire by purchase or by such an exchange.
- Treas. Reg. §Treas. Reg. §1.1091-1(g) For purposes of determining under this section the 61-day period applicable to a short sale of stock or securities, the principles of paragraph (a) of § 1.
- Treas. Reg. §Treas. Reg. §1.1091-1(h) §1.1091-1(h)
- Treas. Reg. §Treas. Reg. §1.1091-2 Basis of stock or securities acquired in “wash sales”
- Treas. Reg. §Treas. Reg. §1.1091-2(a) In general.
- Treas. Reg. §Treas. Reg. §1.1091-2(b) Special rule.
21 Citing Cases
Under section 1091, no deduction is allowed for a loss sustained from the sale of securities if, within a period beginning 30 days before the sale and ending 30 days after the sale the taxpayer has acquired substantially identical securities. See also Treas. Reg. 1.1091-1(a). This is known as the “wash-sale” rule. The Form 1099-B states $5.62 for “Wash S
72(t)(1); see also Dwyer v.
(d) Special Rules.--For purposes of this section-- (1) Coordination with certain rules.--The rules of sections 263(g), 263A, and 1256(a) shall not apply to securities to which subsection (a) applies, and section 1091 shall not apply (and section 1092 shall apply) to any loss recognized under subsection (a).
6 days after the sale, Dr. Schwalbach purchased an interest in another 4,100 shares of Impression. Petitioners did not recognize a loss in 1993 on the sale of the stock because the C.P.A. considered the purchase-sale-purchase as a "wash sale" under section 1091. In 1994, petitioners, upon the advice of the C.P.A., reported a short-term capital loss of $16,050 on their 1994 Schedule D, Capital Gains and Losses, with respect to Impression's stock. The C.P.A. rendered his advice after ascertaining
6 days after the sale, Dr. Schwalbach purchased an interest in another 4,100 shares of Impression. Petitioners did not recognize a loss in 1993 on the sale of the stock because the C.P.A. considered the purchase-sale-purchase as a “wash sale” under section 1091. In 1994, petitioners, upon the advice of the C.P.A., reported a short-term capital loss of $16,050 on their 1994 Schedule D, Capital Gains and Losses, with respect to Impression’s stock. The C.P.A. rendered his advice after ascertaining