What happens to a disallowed wash sale loss?

Under IRC Section 1091, the disallowed loss is added to the cost basis of the replacement shares. This increases your basis, reducing your taxable capital gains (or increasing deductible losses) when the replacement shares are sold.

Updated: August 2026 • Verified v1.2

IRS Section 1091 Wash Sale Loss Disallowance & Basis Calculator

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Disallowed_Loss = Min(Shares_Sold, Shares_Bought) * Loss_Per_Share; Adjusted_Basis = Replacement_Cost + Disallowed_Loss

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Understanding Your Results

Calculates realized loss, applies Section 1091 rules to compute disallowed loss and allowable loss, and adjusts the total and per-share cost basis of replacement shares with holding period tacking explanation.

Practical Guidance & Next Steps

Disallowed wash sale losses are not permanently forfeited; they are added to the cost basis of replacement shares, effectively deferring the tax deduction until the replacement shares are ultimately sold.

What is this?

A capital gains tax planning utility that computes disallowed losses and cost basis adjustments under IRS Section 1091 wash sale rules.

How does it work?

1. Enter shares sold, original cost basis, and loss sale price. 2. Enter replacement shares purchased within 30 days and purchase price. 3. View disallowed loss, allowable deduction, and new adjusted cost basis per share.

Why use it?

Prevents IRS tax penalties and accurately updates portfolio cost basis for Form 8949 reporting.

Technical Scope & Calculation Limitations

Calculates US federal IRS Section 1091 statutory rules.

Frequently Asked Questions

The IRS wash sale rule covers a 61-day period: 30 days before the sale, the day of the sale, and 30 days after the sale. Purchasing substantially identical securities within this window triggers the rule.

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