A wash sale is when you recognize a capital loss and then buy the same stock or security back within a 30-day window. Wash sales are not allowed for stocks and securities. The rule is designed to prevent traders from recognizing a capital loss and then buying back the same stock.
There is debate as to whether wash sales apply to cryptocurrency. However, because cryptocurrency is not considered stock or security, wash sales are permitted for cryptocurrency! The IRS has issued guidance that cryptocurrency is to be taxed as property, and there is currently no restriction in place keeping crypto users from taking advantage of a wash sale.
Accordingly, TaxBit does not restrict users from recording wash sales on their 8949 tax forms. Wash sales would simply be taxed as short-term sales.
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