I.R.C. § 1091(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 entire
amount of gain or loss was recognized by law), or has entered into a contract or
option so to acquire, substantially identical stock or securities, 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 acquire or sell stock or securities.
I.R.C. § 1091(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 particular shares of stock or securities the loss from the sale or other
disposition of which is not deductible shall be determined under regulations prescribed
by the Secretary.
I.R.C. § 1091(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 securities sold or otherwise
disposed of, then the particular shares of stock or securities the acquisition of
which (or the contract or option to acquire which) resulted in the nondeductibility
of the loss shall be determined under regulations prescribed by the Secretary.
I.R.C. § 1091(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 option to acquire which)
resulted in the nondeductibility (under this section or corresponding provisions
of prior internal revenue laws) of the loss from the sale or other disposition of
substantially identical stock or securities, then the basis shall be the basis of
the stock or securities so sold or disposed of, increased 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 securities were sold
or otherwise disposed of.
I.R.C. § 1091(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 a short sale of (or the sale, exchange, or termination of a securities
futures contract to sell) stock or securities if, within a period beginning 30 days
before the date of such closing and ending 30 days after such date—
I.R.C. § 1091(e)(1) —
substantially identical stock or securities were sold, or
I.R.C. § 1091(e)(2) —
another short sale of (or securities futures contracts to sell) substantially identical
stock or securities was entered into.
For purposes of this subsection, the term “securities futures contract”
has the meaning provided by section 1234B(c).
I.R.C. § 1091(f) Cash Settlement —
This 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 or property other than such stock or securities.
(Aug. 16, 1954, ch. 736, 68A Stat. 319; Oct. 4, 1976,
Pub. L. 94-455, title XIX, 1906(b)(13)(A), 90 Stat. 1834; July 18, 1984, Pub. L. 98-369, div. A, title I, 106(a), (b), 98 Stat. 629;
Nov. 10, 1988, Pub. L. 100-647, title V, 5075(a), 102 Stat. 3682;
Dec. 21, 2000, Pub. L. 106-554, Sec. 401, 114 Stat. 2763; Mar. 9, 2002, Pub. L. 107-147, title IV, Sec. 412(d)(2), 116 Stat. 21.)
BACKGROUND NOTES
Amendments to Part
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.
AMENDMENTS
2002—Subsec. (e). Pub. L. 107-147, Sec. 412(d)(2), amended subsec. (e) by substituting “SECURITIES AND SECURITIES FUTURES CONTRACTS
TO SELL.-” for “SECURITIES.-” in the heading; inserting “(or
the sale, exchange, or termination of a securities futures contract to sell)”
after “closing of a short sale of”; by inserting “(or securities
futures contracts to sell)"
after “short sale of” in par. (2); and by adding the flush sentence at
the end.
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.
EFFECTIVE DATE OF 2002 AMENDMENT
Section 412(e) of Pub. L. 107-147 provided that:
“The amendments made by this section shall take effect as if included in the
provisions of the Community Renewal Tax Relief Act of 2000
[Pub. L. 106-554, Sec. 401] to which they relate.
EFFECTIVE DATE OF 2000 AMENDMENT
Section 401(j) of Pub. L. 106-554 provided that:
“The amendments made by this section shall take effect on the date of the enactment
of this Act [Enactment Date: Dec. 21, 2000].”
EFFECTIVE DATE OF 1988 AMENDMENT
Section 5075(b) of Pub. L. 100-647 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
Section 106(c) of Pub. L. 98-369 provided that:
“(1) Subsection (a).--The amendment made by subsection
(a) [amending this section] shall apply to short sales of stock or securities after
the date of the enactment of this Act [July 18, 1984]
in taxable years ending after such date.
“(2) Subsection (b).--The amendment made by subsection
(b) [amending this section] shall apply to sales after December 31, 1984, in taxable
years ending after such date.”
