fb-wash-0026
{
"facts": "On April 7, 2026, a taxable account sells 150 shares of LMN common stock at a loss. On April 20, 2026 — 13 days later — the account acquires 150 shares of LMN, not by purchase, but in a taxable exchange in which the entire amount of the account's gain on the property surrendered was recognized by law. There are no other LMN acquisitions within 30 days before or after the sale.",
"question_context": "The account's operator reasons that section 1091 only reaches shares acquired 'by purchase,' so an exchange cannot trigger it."
}How does section 1091 treat the realized loss on the April 7 sale? Answer with exactly one option id.
loss-disallowed-fully— Fully disallowed — acquisition by an exchange on which the entire gain or loss was recognized triggers the rule just as a purchase doesloss-fully-deductible— Fully deductible — only acquisitions by purchase trigger the wash-sale ruleloss-disallowed-partially— Half disallowed — exchanges count at half weight
loss-disallowed-fully
Section 1091(a) reaches a taxpayer who 'has acquired (by purchase or by an exchange on which the entire amount of gain or loss was recognized by law)' substantially identical stock within the 61-day period, and 1.1091-1(f) defines 'acquired' the same way. The April 20 acquisition in a fully-recognized taxable exchange is squarely within the definition; 150 replacement shares match all 150 sold, so the loss is disallowed in full.
Selects loss-disallowed-fully, citing the exchange branch of the acquisition definition.
“within a period beginning 30 days before the date of such sale or disposition and ending 30 days after such date, the taxpayer has acquired (by purchase or by an exchange on which the entire amount of gain or loss was recognized by law), or has entered into a contract or option so to acquire, substantially identical stock or securities, then no deduction shall be allowed”
“The word acquired as used in this section means acquired by purchase or by an exchange upon which the entire amount of gain or loss was recognized by law, and comprehends cases where the taxpayer has entered into a contract or option within the 61-day period to acquire by purchase or by such an exchange.”
Each quoted passage is exact-matched, after typographic normalization, against the corpus text fetched from the issuing authority (hashes in the corpus manifest). An item whose quote stops matching fails the build.
“the taxpayer has acquired (by purchase or by an exchange on which the entire amount of gain or loss was recognized by law), or has entered into a contract or option so to acquire, substantially identical stock or securities, then no deduction shall be allowed under section 165” — usc-1091
The April 20 exchange occurred 13 days after the loss sale and recognized the entire gain, so it is expressly treated as an acquisition under section 1091(a). Because 150 substantially identical LMN shares were acquired and 150 were sold, all sold shares are matched to replacement shares; therefore the realized loss is fully disallowed.
“the taxpayer has acquired (by purchase or by an exchange on which the entire amount of gain or loss was recognized by law), or has entered into a contract or option so to acquire, substantially identical stock or securities, then no deduction shall be allowed” — usc-1091
Section 1091(a) expressly treats acquisition by a fully recognized exchange the same as acquisition by purchase. The April 20 acquisition of 150 LMN shares occurred 13 days after the April 7 sale of 150 shares, inside the statutory window, and the stipulated exchange recognized the entire gain. Because the quantity acquired is not less than the quantity sold, 1091(a) and 1091(c) disallow the entire loss. The operator's 'purchase-only' reading is contrary to the statute and to Treas. Reg. § 1.1091-1(f). The key's value and derivation therefore match the sources.
v1; no errata. Demonstrate a key error and the correction is published here, credited — challenge policy.