The wash sale rule refers to a rule promulgated by the Internal Revenue Services under which a taxpayer is prohibited from claiming a loss on a sale of an investment when that same investment was purchased within thirty (30) days before or after the sale date. See 26 U.S.C. § 1091.
G.I.C. Corp., Inc. v. U.S., 1996 WL 422130 (S.D. Fl. May 13, 1996):
“The wash sale rule, set forth in Section 1091 of the Internal Revenue Code, 26 U.S.C. §1091, does not apply when an option rests with the buyer rather than the seller of securities, so the transaction in this case does not violate that rule.”
Trenton Cotton Oil Co., Trenton, Tenn. v. C.I.R., 148 F.2d 208 (6th Cir. 1945):
“The purpose of the [wash sale rule statute] was to prevent a taxpayer from claiming a loss where it had been recouped by the taxpayer by repurchasing or contracting to repurchase substantially identical securities ‘within a period beginning 30 days before the date of such sale or disposition and ending 30 days after such date.’ The word ‘identical’ as used in the statute, is not to be construed in a restrictive manner, but as used, it means without material or substantial change in the securities sold and those repurchased. This is more apparent when the qualifying word ‘substantially’ used with the word ‘identical’ is given its usual and ordinary meaning. Thus, taking the phrase in the light of the purpose of the statute, it means materially or essentially the same property.”