When you sell a stock at a loss and buy it back within 30 days, the wash sale rule disallows the loss. But that rule applies to "securities" — and the IRS treats crypto as property, not a security. Under current law, that means crypto investors can harvest losses and repurchase immediately. It's a real advantage, and it's exactly the kind of position that needs to be revisited each year as the law evolves.
The wash sale rule lives in IRC §1091, and it applies to a loss on the sale of "stock or securities" when you buy substantially identical stock or securities within 30 days before or after. The IRS, in Notice 2014-21, classified convertible virtual currency as property — not stock and not a security. Because §1091 is written narrowly, it doesn't reach property like cryptocurrency.
The practical result: a crypto investor can sell a position at a loss, lock in the capital loss for tax purposes, and buy the same coin back minutes later — keeping their market exposure while still claiming the loss. With a stock, that loss would be disallowed and rolled into basis. With crypto, under current law, it isn't.
Capital losses first offset capital gains, then up to $3,000 of ordinary income per year, with the rest carried forward indefinitely. In a volatile crypto year, deliberately harvesting losses against your realized gains can meaningfully cut your tax bill — without changing what you actually hold.
You can only harvest a loss you can prove. Accurate per-lot cost basis across every wallet and exchange is the foundation — and where most investors fall short.
We identify positions sitting below basis and realize losses to offset gains you've already taken, plus up to $3,000 of ordinary income.
Trade records, timestamps, and reporting on Form 8949 keep the strategy clean and defensible if the IRS ever asks.
Congress has repeatedly proposed extending the wash sale rule to digital assets. If that passes, repurchasing the same coin within 30 days of a harvested loss would no longer work. We track the legislation and adjust your strategy before deadlines, rather than after. Treat the loophole as available now, not guaranteed forever.
Even while §1091 doesn't apply, selling and instantly rebuying with no real change in position can invite scrutiny under broader doctrines. We structure loss harvesting so it has genuine substance and holds up.
The first consultation is free. We'll review your positions and build a loss-harvesting plan that fits current law.