Wash sales

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Wash sales

You’ve executed a wash sale if you sell or trade stock or securities at a loss and within 30 calendar days, do one of the following:

Buy or acquire substantially identical stock or securities as a taxable trade
Acquire a contract or option to buy substantially identical stock or securities

Keep in mind, the wash-sale window applies to purchases 30 days before and after selling for a loss. Including the day of sale, this equals a 61-day window.

When selecting tax lots for securities to sell at a loss, be aware that wash sale rules still apply, so additional trading activity within 30 days before and after this sale may trigger a wash sale.

The IRS prohibits taxpayers from claiming losses from wash sales for tax purposes. You can find your total wash sales for a specific account for the year in Box 1G of the applicable 1099 tax document.

Example

An example of a wash sale is if you:

Purchase 100 shares of YOWL for $1,000
2 weeks later, sell them for $800
2 weeks after the sale, you repurchase 100 new shares of YOWL for $900
2 weeks after the repurchase, you sell that 100 YOWL shares for $1,300

Because of the wash sale rule, the $200 loss is disallowed and added to the cost basis of the repurchased shares. When you sell the repurchased shares any gain or loss from this trade is based on a cost of $1,100. ($900 original cost + $200 disallowed loss).

Wash sales apply across all of your investing accounts, including other Robinhood accounts and accounts held outside of Robinhood. We recommend consulting a tax professional to help identify wash sales across all your accounts and determine if your holdings are substantially similar or identical. Check out the IRS Publication 550 for more information.

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