- A wash sale occurs when an investor sells or trades a security at a loss, and within 30 days before or after, buys another one that is substantially similar.
- It also happens if the individual sells the security at a loss, and their spouse or a company they control buys a substantially similar security within 30 days.
- The wash-sale rule prevents taxpayers from deducting a capital loss on the sale against the capital gain.
When the wash sale is disallowed, the amount of the loss is added to the basis of the second group of stocks that you purchased. If those stocks were sold prior to the end of the year the wash sale would have been resolved.
It still should be reported on your 1099-B in box 1g.
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This answer has been verified for accuracy by an Intuit expert employee
