Is Put vs Call a Wash Sale?

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    Is it a wash sale if I sold to close a put option for a loss and within the wash period bought a call option on the same underlying?

    Kaye Thomas

    I don’t believe there is any guidance specifically addressing this question, but it would seem to be a stretch for the IRS to say these two instruments are substantially identical, so I would be comfortable not applying the wash sale rule here.


    Thank you for your answer.
    I agree that the wash sale rule should not apply because of the instruments not being substantially identical.
    But I was shocked when Tradelog software flagged it as a wash.
    Publication 550 says “Buying a put option is generally treated as a short sale…”. The example on short sales seems to suggest that after loosing on a short sale, buying identical shares triggers a wash sale, though the example was intended to show how selling does, which obfuscates the murkiness even further.

    I am inclined to report only a different wash sale from 1099b, not this one, and maybe one or two others on 8949 and sum of the remaining on Schedule D line 1a as per your answer to “1099-B on individual stocks and wash sale reporting”. I never knew that was allowed. Thank you for pointing out that out.

    I note that reporting a transaction for which the basis was reported on 1099b, yet is a wash sale and was not reported as a wash sale on 1099b leads to having to report 2 transactions on form 8949. The first is the wash sale with code “W” in column (f) and the adjustment as a positive number in column (g). The other is the transaction to which the basis must be added with the basis as reported on 1099b in column (e), the code “B” in column (f), and the adjustment as a negative number in column (g).
    The software and probably most, do not do that correctly, and I probably wouldn’t either if I had not happened to notice the words printed at the bottom of form 8949. This way it seems unnecessary to attach an explanation.

    From page 7 of the instructions for form 8949:

    If this transaction is reported on a Part I with box A
    checked at the top or if this transaction is reported on a
    Part II with box D checked at the top, enter the basis shown
    on Form 1099-B (or substitute statement) in column (e),
    even though that basis is incorrect. Correct the error by
    entering an adjustment in column (g). To figure the
    adjustment needed, see the Worksheet for Basis
    Adjustments in Column (g)

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