Wash Sale Rule Explained: The 61-Day Window and Cost Basis

The wash sale rule explained in plain English: you can lose money selling shares and still have no deduction for that loss on the current tax return. Under U.S. federal rules, acquiring the same or substantially identical securities within 30 days before or after a loss sale can disallow the deduction. In a typical taxable-account replacement, you add the disallowed loss to the replacement shares' cost basis. An IRA purchase has a different consequence.

A falling stock chart alone cannot tell you whether this rule applies. You need the actual sales, purchases, and account records. For the broader distinction between price changes and taxable transactions, start with how stocks are taxed.

Source check: November 9, 2026. This guide uses the IRS's available 2025 Publication 550, its 2026 Form 1099-B instructions, and Revenue Ruling 2008-5. The examples use invented securities and prices to explain U.S. federal concepts; they are not tax-return instructions or trading recommendations.

Wash sale rule explained with a 61-day calendar

The window includes the sale date, the 30 calendar days before it, and the 30 calendar days after it. Count weekends and holidays. Section 1091 of the Internal Revenue Code defines the before-and-after period; it also covers certain contracts or options to acquire substantially identical securities.

Suppose you sell an old lot of fictional Company A shares at a loss on November 9, 2026:

An October 20 replacement purchase can matter even though it happened before the sale. Waiting until after a sale to examine purchases misses that part of the record. The table identifies this sale's window only; another loss sale would have its own dates.

A wash sale cost basis example

Assume one taxable account, one original lot, and one replacement purchase, with no fees or other transactions:

1. You bought 100 Company A shares months ago for $50 each, a $5,000 basis.
2. You sell those 100 shares on November 9 for $40 each, receiving $4,000.
3. You buy 100 shares of the same stock on November 20 for $42 each, spending $4,200.

The sale produced a $1,000 loss. Because you replaced the shares inside the window, you cannot deduct that loss from this sale. Following the IRS Publication 550 basis adjustment, add it to the replacement purchase:

``text Replacement purchase cost $4,200 Disallowed loss +$1,000 Adjusted replacement basis $5,200 Adjusted basis per share $52 ``

The adjusted basis exceeds the $42 purchase price. You have still spent $4,200 on the new shares; the extra $1,000 records the loss for tax purposes. The IRS also carries the original shares' holding period into the replacement shares' holding period. A later sale requires its own gain-or-loss calculation and another check for wash sales.

Replacing fewer shares can create a partial wash sale

Change only the November 20 purchase to 25 shares at $42. The original loss was $10 per share. Matching 25 replacement shares disallows $250 of the loss, leaving $750 outside this wash-sale adjustment before other tax rules apply.

The replacement lot costs $1,050. Adding $250 produces a $1,300 adjusted basis, or $52 per share. The 2026 Form 1099-B instructions illustrate this share-matching approach. Several purchases, different loss amounts per lot, or repeated sales need more detailed matching than this single-lot example.

Dividend reinvestment and IRA purchases deserve a separate check

A purchase can happen without you entering a new order. A dividend reinvestment plan buys shares, so a reinvestment within the window can create a wash sale for matched shares. Fidelity's wash-sale explanation discusses this issue. Check the reinvestment date and share quantity in your records, including fractional shares.

Purchasing replacement shares in another account can also matter. In Revenue Ruling 2008-5, the IRS addresses a loss sale followed by the individual's IRA purchase of identical stock. It disallows the loss and does not increase the individual's basis in the IRA or Roth IRA. You cannot assume that you will recover the loss through the taxable replacement-basis adjustment shown above.

Account ownership matters beyond your own taxable account. Publication 550 also describes purchases by a spouse or a corporation you control. Collect those relevant records before treating one broker's calculation as complete.

A different ETF ticker does not settle the tax question

The IRS uses “substantially identical,” which requires examining the facts and circumstances. Fidelity notes the lack of clear guidelines for deciding whether fund replacements meet that standard. A new ticker alone does not establish the answer.

You can compare stocks and ETFs to inspect their historical price paths. Similar returns, high correlation, or different fund names do not establish a tax classification. Equity Replay's ETF overlap guide helps you examine shared holdings, but an overlap percentage cannot determine whether two securities are substantially identical. Bring an uncertain fund comparison to a qualified tax professional.

Form 1099-B may show only part of the picture

Box 1g reports wash sale losses that the broker disallows. Under the IRS's 2026 broker instructions, mandatory reporting concerns covered securities with the same CUSIP number and sale and purchase transactions in the same account. Brokers may report more, but that requirement does not make one statement a check across all your accounts.

Compare the form with purchase and sale confirmations, reinvestments, and relevant transactions elsewhere. The IRS says you cannot deduct a wash-sale loss even if Form 1099-B does not report it. Use the applicable year's forms and instructions with your preparer to resolve missing adjustments or inconsistent basis records.

A historical replay cannot establish a deductible loss

If an illustrative $10,000 replay ends at $8,000, the $2,000 difference measures that scenario's closing-price decline. You have no actual sale, share lots, or replacement-purchase history from which to determine a wash sale or tax deduction.

Equity Replay applies entered allocation weights once at the start of a historical window. It does not simulate trades, buy-and-hold execution, rebalancing, contributions, withdrawals, dividends, fees, or taxes. Changing a symbol in the portfolio builder starts another illustrative comparison; it does not create a taxable transaction or calculate a tax-loss strategy.

Use the historical replay methodology to interpret the chart and account records to investigate tax questions. Equity Replay is an educational historical simulator, not investment advice, a broker, or a record of trades. This guide provides no personalized tax recommendation, prediction, or instruction to buy, hold, sell, or rebalance securities.