How it works
Section 1091 disallows a loss on a stock or security sold and repurchased within 30 days before or after the sale, adding the loss to the basis of the new shares. Because the IRS classifies cryptocurrency as property rather than a security, the rule does not currently apply to crypto. Congress has proposed extending it to digital assets several times; as of this writing none of those proposals is law.
Why it matters
Crypto investors can sell at a loss and repurchase immediately while still claiming the loss, which stock investors cannot do. The loss must be a real disposal at a loss, properly documented; software that mislabels wallet transfers as sales does not create deductible losses. Because the rule could change, the treatment should be confirmed for the tax year involved.
Example
You bought 1 BTC at 70,000 dollars. It falls to 55,000. You sell, realize a 15,000 dollar loss, and buy 1 BTC back the same day at 55,000. The loss is deductible, and your new basis is 55,000 dollars.
Related: tax loss harvesting. Read more: the crypto wash sale rule in 2026.
