The wash-sale rule: match the dates and replacement shares
Map the full 61-day window, calculate partial loss deferral, and carry the disallowed loss into replacement-share basis.
The decision that earns the point
Classify the tax fact before calculating
The wash-sale rule generally disallows a loss on stock or securities when substantially identical stock or securities are acquired within 30 days before or after the loss sale. The matched loss is added to replacement-property basis, and the replacement holding period includes the holding period of the disposed shares.
Exam use
REG can test the 61-day window, partial replacement, matched-share basis, and the holding period carried into replacement stock or securities.
Your scratch-paper plan
Solve it in three moves
- 1
Locate the loss sale
Confirm a loss on stock or securities before applying the wash-sale window.
26 USC §1091: Loss from wash sales of stock or securities - 2
Scan both sides of the sale
Check acquisitions during the 30 days before and the 30 days after the loss sale.
26 USC §1091: Loss from wash sales of stock or securities - 3
Match shares and move the loss
Disallow only the matched loss and add it to the basis of the matched replacement shares.
26 USC §1091: Loss from wash sales of stock or securities
Worked problem
Work the facts before choosing the answer
A taxpayer sells 100 shares for a $2,000 loss and buys 100 substantially identical shares 10 days later. No other acquisition is inside the 61-day window.
CPAPass original exam illustration using stated assumptions
Show the work
All 100 replacement shares match the 100 loss shares, so the full $2,000 loss is disallowed under §1091.
Rule source: 26 USC §1091: Loss from wash sales of stock or securitiesAnswer
Add $2,000 to the replacement shares' basis and carry the disposed shares' holding period into the replacement shares.
Rule source: 26 USC §1091: Loss from wash sales of stock or securitiesDo it now
Test the same decision with a fresh question
Start with free REG practice. Create an account only when you want the 5-day no-card CPAPass trial and continued section practice.
The trap and the repair
Common trap
Checking only purchases after the sale ignores the 30-day period before the loss sale.
Repair
Draw the full 61-day window, list every acquisition, and match replacement shares to loss shares before calculating basis.
Wash-sale mechanics
Match dates, shares, basis, and holding period
The rule does not erase the matched tax loss. It moves the loss into replacement basis and carries time into the replacement shares.
| Decision | Exam treatment | Record to preserve | Authority |
|---|---|---|---|
| Window | Test acquisitions from 30 days before through 30 days after the loss sale | Sale date and every acquisition date | 26 USC §1091: Loss from wash sales of stock or securities |
| Partial replacement | Disallow the loss only for the number of matched shares | Per-share loss and matched quantity | 26 USC §1091: Loss from wash sales of stock or securities |
| Replacement basis | Increase matched replacement basis by the disallowed loss | Adjusted basis for the later sale | 26 USC §1091: Loss from wash sales of stock or securities |
| Holding period | Include the disposed property's holding period in the replacement property | Replacement acquisition history | 26 USC §1223: Holding period of property |
After a miss
Rebuild the wash-sale timeline
- 1
Plot the sale date and the two 30-day sides of the window before looking at purchase prices.
- 2
Rework the 100-share example with only 40 replacement shares and calculate the matched disallowance and basis increase.
- 3
Finish with a second wash-sale scenario and carry both replacement basis and holding period into the final line.
Your exam workflow
- Step 1Read the requirementIdentify what the task asks you to decide about wash sale rule cpa exam.
- Step 2Sort the factsConfirm a loss on stock or securities before applying the wash-sale window.
- Step 3Apply the ruleCheck acquisitions during the 30 days before and the 30 days after the loss sale.
- Step 4Check the outputDisallow only the matched loss and add it to the basis of the matched replacement shares.
Keep the next step narrow
Quick questions
What is the shortest useful answer for wash sale rule cpa exam?
The wash-sale rule generally disallows a loss on stock or securities when substantially identical stock or securities are acquired within 30 days before or after the loss sale. The matched loss is added to replacement-property basis, and the replacement holding period includes the holding period of the disposed shares.
How can wash sale rule cpa exam appear on the CPA Exam?
REG can test the 61-day window, partial replacement, matched-share basis, and the holding period carried into replacement stock or securities. The exact task can change, so identify the governing facts before applying the rule.
What is the most common mistake with wash sale rule cpa exam?
Checking only purchases after the sale ignores the 30-day period before the loss sale. Draw the full 61-day window, list every acquisition, and match replacement shares to loss shares before calculating basis.
Where should I practice wash sale rule cpa exam?
After the worked example, use REG practice for a fresh question that requires the same decision. If the miss depends on capital gains and losses, review that handoff before trying another set.
How should I review wash sale rule cpa exam after a missed question?
Plot the sale date and the two 30-day sides of the window before looking at purchase prices. Rework the 100-share example with only 40 replacement shares and calculate the matched disallowance and basis increase. Finish with a second wash-sale scenario and carry both replacement basis and holding period into the final line.