Wash Sales
Complete guide to wash sales and how TaxFormatter detects them
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The REST API reference, plus guides for the dashboard uploader.
Complete guide to wash sales and how TaxFormatter detects them
A wash sale happens when you sell an asset at a loss and buy the same or substantially identical asset within 30 days (before or after the sale).
Jan 15: Buy 1 BTC at $40,000
Jan 20: Sell 1 BTC at $35,000 (Loss: $5,000)
Jan 25: Buy 1 BTC at $36,000 ← WASH SALE
The $5,000 loss is disallowed.
The wash sale rule prevents tax loss harvesting abuse. Without it, you could:
The rule covers trades within 30 days before to 30 days after the sale:
Day 1: Buy BTC
Day 16: Sell BTC at loss ← SALE DATE
Days -30 to +30 matter
Day 20: Buy BTC ← WASH SALE (within 30-day window)
Day 46: Buy BTC ← OK (outside 30-day window)
When you upload your CSV, we:
Day 16: Sell BTC at loss
Day 47: Buy BTC ← No wash sale (outside 30-day window)
Day 16: Sell BTC at loss
Day 20: Buy ETH instead ← No wash sale (different asset)
TaxFormatter formats your export and, in the dashboard's AI Insights panel, lists sell-then-rebuy patterns worth a second look. It does not adjust cost basis or annotate rows — report the adjustment in your tax software or with your tax professional.
Report all sales on Form 8949 (Sales of Capital Assets). In the description column, note:
"BTC wash sale (see wash sale disallowance)"
Carry totals to Schedule D (Capital Gains and Losses).