26 U.S.C. § 1091 — Loss from wash sales of stock or securities

Page 2303 TITLE 26—INTERNAL REVENUE CODE § 1091 ‘‘(A) sales and exchanges on or after January 17, 1995, and ‘‘(B) sales and exchanges before such date if the FCC tax certificate with respect to such sale or ex- change is issued on or after such date. ‘‘(2) BINDING CONTRACTS.— ‘‘(A) IN GENERAL.—The amendments made by this section shall not apply to any sale or exchange pursu- ant to a written contract which was binding on Janu- ary 16, 1995, and at all times thereafter before the sale or exchange, if the FCC tax certificate with respect to such sale or exchange was applied for, or issued, on or before such date. ‘‘(B) SALES CONTINGENT ON ISSUANCE OF CERTIFI- CATE.— ‘‘(i) IN GENERAL.—A contract shall be treated as not binding for purposes of subparagraph (A) if the sale or exchange pursuant to such contract, or the material terms of such contract, were contingent, at any time on January 16, 1995, on the issuance of an FCC tax certificate. The preceding sentence shall not apply if the FCC tax certificate for such sale or exchange is issued on or before January 16, 1995. ‘‘(ii) MATERIAL TERMS.—For purposes of clause (i), the material terms of a contract shall not be treat- ed as contingent on the issuance of an FCC tax cer- tificate solely because such terms provide that the sales price would, if such certificate were not issued, be increased by an amount not greater than 10 percent of the sales price otherwise provided in the contract. ‘‘(3) FCC TAX CERTIFICATE.—For purposes of this sub- section, the term ‘FCC tax certificate’ means any cer- tificate of the Federal Communications Commission for the effectuation of section 1071 of the Internal Revenue Code of 1986 (as in effect on the day before the date of the enactment of this Act [Apr. 11, 1995]).’’ [PART VI—REPEALED] [§§ 1081 to 1083. Repealed. Pub. L. 109–135, title IV, § 402(a)(1), Dec. 21, 2005, 119 Stat. 2610] Section 1081, acts Aug. 16, 1954, ch. 736, 68A Stat. 312; Pub. L. 94–455, title XIX, §§ 1901(a)(132), 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1786, 1834, provided for nonrecogni- tion of gain or loss on exchanges or distributions in obedience to orders of SEC. Section 1082, acts Aug. 16, 1954, ch. 736, 68A Stat. 315; Pub. L. 91–172, title VII, § 704(b)(3), Dec. 30, 1969, 83 Stat. 669; Pub. L. 92–178, title III, § 303(c)(5), Dec. 10, 1971, 85 Stat. 522; Pub. L. 94–455, title XIX, §§ 1901(b)(11)(C), 1906(b)(13)(A), 1951(c)(2)(B), title XXI, § 2124(a)(3)(C), Oct. 4, 1976, 90 Stat. 1795, 1834, 1840, 1917; Pub. L. 97–34, title II, § 212(d)(2)(E), Aug. 13, 1981, 95 Stat. 239; Pub. L. 99–514, title II, § 242(b)(1), Oct. 22, 1986, 100 Stat. 2181; Pub. L. 101–508, title XI, § 11801(c)(6)(D), Nov. 5, 1990, 104 Stat. 1388–524, related to basis for determining gain or loss. Section 1083, acts Aug. 16, 1954, ch. 736, 68A Stat. 317; Pub. L. 94–455, title XIX, § 1901(a)(133), Oct. 4, 1976, 90 Stat. 1786, related to definitions for this part. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF REPEAL Repeal effective as if included in the provisions of the Energy Policy Act of 2005, Pub. L. 109–58, to which it re- lates, but not applicable with respect to any trans- action ordered in compliance with the Public Utility Holding Company Act of 1935 (15 U.S.C. 79 et seq.) be- fore that Act’s repeal, see section 402(m) of Pub. L. 109–135, set out as an Effective and Termination Dates of 2005 Amendments note under section 23 of this title. PART VII—WASH SALES; STRADDLES Sec. 1091. Loss from wash sales of stock or securities. Sec. 1092. Straddles. Editorial Notes AMENDMENTS 1981—Pub. L. 97–34, title V, § 501(d)(1), (2), Aug. 13, 1981, 95 Stat. 326, 327, substituted as part heading ‘‘WASH SALES; STRADDLES’’ for ‘‘WASH SALES OF STOCK OR SECURITIES’’ and added item 1092. § 1091. Loss from wash sales of stock or securities (a) Disallowance of loss deduction In the case of any loss claimed to have been sustained from any sale or other disposition of shares of stock or securities where it appears that, within a period beginning 30 days before the date of such sale or disposition and ending 30 days after such date, the taxpayer has acquired (by purchase or by an exchange on which the en- tire amount of gain or loss was recognized by law), or has entered into a contract or option so to acquire, substantially identical stock or secu- rities, then no deduction shall be allowed under section 165 unless the taxpayer is a dealer in stock or securities and the loss is sustained in a transaction made in the ordinary course of such business. For purposes of this section, the term ‘‘stock or securities’’ shall, except as provided in regulations, include contracts or options to ac- quire or sell stock or securities. (b) Stock acquired less than stock sold If the amount of stock or securities acquired (or covered by the contract or option to acquire) is less than the amount of stock or securities sold or otherwise disposed of, then the par- ticular shares of stock or securities the loss from the sale or other disposition of which is not deductible shall be determined under regula- tions prescribed by the Secretary. (c) Stock acquired not less than stock sold If the amount of stock or securities acquired (or covered by the contract or option to acquire) is not less than the amount of stock or securi- ties sold or otherwise disposed of, then the par- ticular shares of stock or securities the acquisi- tion of which (or the contract or option to ac- quire which) resulted in the nondeductibility of the loss shall be determined under regulations prescribed by the Secretary. (d) Unadjusted basis in case of wash sale of stock If the property consists of stock or securities the acquisition of which (or the contract or op- tion to acquire which) resulted in the non- deductibility (under this section or cor- responding provisions of prior internal revenue laws) of the loss from the sale or other disposi- tion of substantially identical stock or securi- ties, then the basis shall be the basis of the stock or securities so sold or disposed of, in- creased or decreased, as the case may be, by the difference, if any, between the price at which the property was acquired and the price at which such substantially identical stock or se- curities were sold or otherwise disposed of. (e) Certain short sales of stock or securities and securities futures contracts to sell Rules similar to the rules of subsection (a) shall apply to any loss realized on the closing of Page 2304 TITLE 26—INTERNAL REVENUE CODE § 1092 a short sale of (or the sale, exchange, or termi- nation of a securities futures contract to sell) stock or securities if, within a period beginning 30 days before the date of such closing and end- ing 30 days after such date— (1) substantially identical stock or securities were sold, or (2) another short sale of (or securities fu- tures contracts to sell) substantially identical stock or securities was entered into. For purposes of this subsection, the term ‘‘secu- rities futures contract’’ has the meaning pro- vided by section 1234B(c). (f) Cash settlement This section shall not fail to apply to a con- tract or option to acquire or sell stock or securi- ties solely by reason of the fact that the con- tract or option settles in (or could be settled in) cash or property other than such stock or secu- rities. (Aug. 16, 1954, ch. 736, 68A Stat. 319; Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub. L. 98–369, div. A, title I, § 106(a), (b), July 18, 1984, 98 Stat. 629; Pub. L. 100–647, title V, § 5075(a), Nov. 10, 1988, 102 Stat. 3682; Pub. L. 106–554, § 1(a)(7) [title IV, § 401(d)], Dec. 21, 2000, 114 Stat. 2763, 2763A–649; Pub. L. 107–147, title IV, § 412(d)(2), Mar. 9, 2002, 116 Stat. 53.) Editorial Notes AMENDMENTS 2002—Subsec. (e). Pub. L. 107–147 substituted ‘‘securi- ties and securities futures contracts to sell’’ for ‘‘secu- rities’’ in heading, inserted ‘‘(or the sale, exchange, or termination of a securities futures contract to sell)’’ after ‘‘closing of a short sale of’’ in introductory provi- sions and ‘‘(or securities futures contracts to sell)’’ after ‘‘short sale of’’ in par. (2), and inserted concluding provisions. 2000—Subsec. (f). Pub. L. 106–554 added subsec. (f). 1988—Subsec. (a). Pub. L. 100–647 inserted sentence at end defining ‘‘stock or securities’’. 1984—Subsec. (a). Pub. L. 98–369, § 106(b), substituted ‘‘no deduction shall be allowed under section 165 unless the taxpayer is a dealer in stock or securities and the loss is sustained in a transaction made in the ordinary course of such business’’ for ‘‘no deduction for the loss shall be allowed under section 165(c)(2); nor shall such deduction be allowed a corporation under section 165(a) unless it is a dealer in stocks or securities, and the loss is sustained in a transaction made in the ordinary course of business’’. Subsec. (e). Pub. L. 98–369, § 106(a), added subsec. (e). 1976—Pub. L. 94–455 struck out ‘‘or his delegate’’ after ‘‘Secretary’’ wherever appearing. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2002 AMENDMENT Amendment by Pub. L. 107–147 effective as if included in the provisions of the Community Renewal Tax Relief Act of 2000 [H.R. 5662, as enacted by Pub. L. 106–554], to which such amendment relates, see section 412(e) of Pub. L. 107–147, set out as a note under section 151 of this title. EFFECTIVE DATE OF 1988 AMENDMENT Pub. L. 100–647, title V, § 5075(b), Nov. 10, 1988, 102 Stat. 3682, provided that: ‘‘The amendment made by subsection (a) [amending this section] shall apply with respect to any sale after the date of enactment of this Act [Nov. 10, 1988], in taxable years ending after such date.’’ EFFECTIVE DATE OF 1984 AMENDMENT Pub. L. 98–369, div. A, title I, § 106(c), July 18, 1984, 98 Stat. 629, provided that: ‘‘(1) SUBSECTION (a).—The amendment made by sub- section (a) [amending this section] shall apply to short sales of stock or securities after the date of the enact- ment of this Act [July 18, 1984] in taxable years ending after such date. ‘‘(2) SUBSECTION (b).—The amendment made by sub- section (b) [amending this section] shall apply to sales after December 31, 1984, in taxable years ending after such date.’’ § 1092. Straddles (a) Recognition of loss in case of straddles, etc. (1) Limitation on recognition of loss (A) In general Any loss with respect to 1 or more posi- tions shall be taken into account for any taxable year only to the extent that the amount of such loss exceeds the unrecog- nized gain (if any) with respect to 1 or more positions which were offsetting positions with respect to 1 or more positions from which the loss arose. (B) Carryover of loss Any loss which may not be taken into ac- count under subparagraph (A) for any tax- able year shall, subject to the limitations under subparagraph (A), be treated as sus- tained in the succeeding taxable year. (2) Special rule for identified straddles (A) In general In the case of any straddle which is an identified straddle— (i) paragraph (1) shall not apply with re- spect to positions comprising the identi- fied straddle, (ii) if there is any loss with respect to any position of the identified straddle, the basis of each of the offsetting positions in the identified straddle shall be increased by an amount which bears the same ratio to the loss as the unrecognized gain with respect to such offsetting position bears to the aggregate unrecognized gain with re- spect to all such offsetting positions, (iii) if the application of clause (ii) does not result in an increase in the basis of any offsetting position in the identified straddle, the basis of each of the offsetting positions in the identified straddle shall be increased in a manner which— (I) is reasonable, consistent with the purposes of this paragraph, and consist- ently applied by the taxpayer, and (II) results in an aggregate increase in the basis of such offsetting positions which is equal to the loss described in clause (ii), and (iv) any loss described in clause (ii) shall not otherwise be taken into account for purposes of this title. (B) Identified straddle The term ‘‘identified straddle’’ means any straddle— (i) which is clearly identified on the tax- payer’s records as an identified straddle before the earlier of—