Wash Sale
A wash sale occurs when you sell a security at a loss and then purchase that same security or "substantially identical" securities within 30 days.
In a scenario where a security is sold at a loss and within that 30 day window you sell an ITM Cash Secured Put of the same security with an expiration date of 30 days. Is an ITM Put considered substantially identical if it is reasonable to assume the Put will be exercised?
My brokerage said they would not flag it as a wash sale but the IRS might disagree and to consult a tax expert.
Best Answer
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Hi Jeremy,
Generally the IRS is relying on the information the broker provides in the 1099-B. So if your broker is not flagging and reporting a Wash sale, the IRS will not have any information to actually disagree with.
