Q - What is a wash sale?

The IRS does not allow you to deduct losses from sales or trades of stock or securities in a wash sale unless the loss was incurred in the ordinary course of your business as a dealer in stock or securities.

A wash sale occurs when you sell or trade stock or securities at a loss and within 30 days before or after the sale you:

  • Buy substantially identical stock or securities;
  • Acquire substantially identical stock or securities in a fully taxable trade;
  • Acquire a contract or option to buy substantially identical stock or securities; or
  • Acquire substantially identical stock for your Individual Retirement Account (IRA) or Roth IRA.

For additional information about wash sales, please see IRS Publication 550.


Alpaca does not provide tax advice. This material was prepared for informational purposes only and should not be relied on for tax advice. Customers should consult a tax advisor for any tax related questions.