Sold at a loss, bought back 16 days later: the wash-sale rule, checked

1. Your own answer

Claude's conclusion is correct: selling Apple shares at a loss and buying them back 16 days later triggers the wash sale rule, so the $5,000 loss cannot be deducted on this year's taxes. Instead, that loss is added to the cost basis of the newly purchased shares.

2. Claim by claim

• "Unfortunately, no — this is a "wash sale," and the IRS won't let you deduct the loss."
  • Holds
• "The wash sale rule prohibits deducting a loss if you buy substantially identical securities within 30 days before or after the sale."
  • Holds
• "- Sold: December 20
  • Repurchased: January 5 (16 days later) ✗"
  • Holds
• "- The $5,000 loss is disallowed for this year
  • The loss gets added to your cost basis in the new shares, deferring it
  • If you eventually sell those shares at a gain, you'll recognize a smaller gain (the deduction carries forward)
  • If you sell at a loss instead, you'd apply it then"
  • Holds
• "- Wait at least 31 days before repurchasing, or
  • Buy a different but similar security in the meantime (like a different tech stock)
  • Sell without repurchasing if you're willing to exit the position"
  • Holds
• "The rule applies regardless of whether you buy through the same account or broker, so there's no workaround there."
  • Holds (The wash sale rule aggregates transactions across all taxable accounts owned by the same taxpayer, and even applies if you buy the replacement shares in an IRA, where the loss is permanently lost rather than deferred).

3. What it missed

Claude missed an important cross-account warning: the wash sale rule applies across all of your brokerage accounts. Crucially, if you had repurchased those Apple shares inside an IRA or Roth IRA instead of a taxable account, you would trigger a wash sale, but you would permanently lose the ability to add that $5,000 to your cost basis, meaning the tax deduction vanishes forever.

4. Corrected answer

(The original answer holds. The minor note regarding account types is integrated below as an expansion of Claude's final point).

The rule applies across all of your taxable brokerage accounts, so switching brokers provides no workaround. Furthermore, be careful which type of account you use: if you repurchase the shares inside an IRA or Roth IRA, the wash sale rule still applies, but you cannot add the disallowed loss to the IRA's cost basis—meaning the tax deduction is lost permanently.

Pages it consulted: intuit.com · reedcorp.tax · fidelity.com

1. My own answer

No. Because you repurchased substantially identical Apple shares on January 5, within 30 days after the December 20 sale, the $5,000 loss is a wash sale and is disallowed on the return for the year of the sale. Assuming the repurchase was in a taxable account, the disallowed loss is added to the basis of the replacement shares, so it is deferred until you sell those shares.

2. Claim by claim

• "Unfortunately, no — this is a 'wash sale,' and the IRS won't let you deduct the loss."
  Holds. This is the correct result under IRC §1091 and IRS Publication 550.

• "The wash sale rule prohibits deducting a loss if you buy substantially identical securities within 30 days before or after the sale."
  Holds. The wash-sale window runs from 30 days before the sale through 30 days after the sale.

• Sold December 20, repurchased January 5, 16 days later.
  Holds. January 5 is inside the 30-day post-sale window.

• "The $5,000 loss is disallowed for this year"
  Holds. The loss is disallowed for the year of the sale, even though the repurchase occurred in the following January.

• "The loss gets added to your cost basis in the new shares, deferring it"
  Holds for a taxable account. IRS Publication 550 says to add the disallowed loss to the cost basis of the replacement shares, except for shares acquired in an IRA.

• "If you eventually sell those shares at a gain, you'll recognize a smaller gain (the deduction carries forward)"
  Holds, though this is shorthand. The loss is not carried forward as a separate deduction; it is embedded in the basis of the replacement shares.

• "If you sell at a loss instead, you'd apply it then"
  Holds. The higher basis makes the later loss larger by the disallowed amount, assuming no new wash sale.

• "Wait at least 31 days before repurchasing"
  Holds as a practical rule, but you also must avoid purchases in the 30 days before the sale. The answer already states the before-and-after rule elsewhere.

• "Buy a different but similar security in the meantime (like a different tech stock)"
  Holds with a caveat. It must not be substantially identical. A different tech stock generally is not.

• "The rule applies regardless of whether you buy through the same account or broker, so there's no workaround there."
  Holds. Different brokers or accounts do not avoid the wash sale. It can also apply to purchases by your spouse or a controlled entity.

3. What it missed

The main missing caveat is the IRA exception. If the January 5 repurchase was inside an IRA or Roth IRA, the loss is still disallowed, but you do not get the basis adjustment. The loss is permanently lost. The answer’s basis-adjustment explanation assumes a taxable account.

It also does not mention that wash sales can be triggered by purchases made by your spouse or a controlled entity, not just by you in the same or a different brokerage account.

4. Corrected answer

The answer is essentially correct. Add this caveat:

Assuming the January 5 repurchase was in a taxable brokerage account, the disallowed $5,000 loss is added to the basis of the new Apple shares. If you repurchased inside an IRA or Roth IRA, the loss is permanently disallowed and no basis adjustment is available. Also, the wash sale can be triggered by purchases made by your spouse or a controlled entity, not only by you in the same or a different brokerage account.