Options are inside section 1091 twice over, cash settlement is no escape, and a broker's 1099-B reports a disallowed loss only in the narrowest case. What the loss becomes, and where it goes.
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 arrangement (IRA) or Roth IRA.
(IRS Publication 550). The window is 61 days: the day of the loss, 30 before, 30 after.
Options are inside the rule twice over. The statute itself says the term 'stock or securities' shall, except as provided in regulations, include contracts or options to acquire or sell stock or securities
(26 U.S.C. 1091(a)), and Pub 550 restates it: The wash sale rules apply to losses from sales or trades of contracts and options to acquire or sell stock or securities. They do not apply to losses from sales or trades of commodity futures contracts and foreign currencies.
Cash settlement is no escape: the section shall not fail to apply to a contract or option to acquire or sell stock or securities solely by reason of the fact that the contract or option settles in (or could be settled in) cash
(1091(f)).
add the disallowed loss to the cost of the new stock or securities (except in (4) above). The result is your basis in the new stock or securities. This adjustment postpones the loss deduction until the disposition of the new stock or securities.
(Pub 550). The IRA case is the exception: no basis addition there.
Your holding period for substantially identical stock or securities you acquire in a wash sale includes the period you held the old stock or securities.
(Pub 550). A replacement bought yesterday can already be long term.
Report a wash sale transaction in Part I or Part II of Form 8949 with the appropriate box checked. Complete all columns. Enter 'W' in column (f). Enter as a positive number in column (g) the amount of the loss not allowed.
(Pub 550).
A wash sale, by the third bullet above: acquiring a contract or option to buy substantially identical stock
is an acquisition. The disallowed loss goes into the call's basis.
Not resolved by any IRS page. The statute's phrase is a contract or option so to acquire
;
whether a short put is one is a question this page will not answer on the IRS's behalf.
Ask a preparer, and do not take a categorical answer from a forum.
you must consider all the facts and circumstances in your particular case. Ordinarily, stocks or securities of one corporation are not considered substantially identical to stocks or securities of another corporation.
(Pub 550). Two option contracts on the same stock with different strikes or expiries are where the facts start.
Form 6781's instructions, describing the mark-to-market rules, print one sentence:
The wash sale rules don't apply.
(Form 6781). The statute behind it is
narrower than the popular phrasing: section 1091 shall not apply to any loss taken into account by reason of paragraph (1) of subsection (a)
,
that is, by reason of the year-end mark to market (1256(f)(5)). In practice the
Section 1256 result is one aggregate mark-to-market number with no per-lot loss to disallow,
which is why brokers say index options are not subject to the same wash sale rules as equity options
(Schwab). Publication 550
never states a blanket exemption, so this page does not either.
The 1099-B instructions oblige a broker to report a disallowed loss in box 1g
only if both the sale and purchase transactions occur in the same account with respect to covered securities with the same CUSIP number
(Instructions for Form 1099-B). Two accounts, two brokers, a different strike
or a different expiry, or a noncovered security, and the broker's form can be silent. Your
duty is not: you cannot deduct a loss from a wash sale even if it is not reported on Form 1099-B
(Pub 550). Interactive Brokers spells out one consequence: Form 1099-B reports cost basis adjusted for wash sale losses disallowed only when the loss was disallowed on the sale of a covered securities.
(IBKR).
The Form 8949 worksheet matches a loss against a replacement inside the 61-day window across every event in the ledger, options and the share lots an assignment produced, and marks the row. What it does not do yet, and says on the page rather than in a footnote: carry a disallowed loss forward into the replacement's basis for the next year. Until that ships the worksheet names the disallowed amount and leaves the carry to the preparer.
Not tax advice. Facts on this page were read from the linked sources on 2026-09-13; the law and the forms change by year, and a preparer reads your own facts. FillStub produces a worksheet from your broker export, and nothing is filed.