How are capital gains taxed: short-term vs long-term rates and the wash-sale rule? Cite only eCFR (www.ecfr.gov) or U.S. Code sources, never irs.gov. Answer in under 100 words.
Short-Term vs Long-Term Capital Gains
The term short-term applies to gains and losses from the sale or exchange of capital assets held for 1 year (or less), while long-term applies to assets held for more than 1 year. See 26 CFR §1.1222-1(a). Gains and losses must be segregated into these two categories for tax reporting.
Wash-Sale Rule
Under 26 U.S.C. §1091, no loss deduction is allowed on the sale of stock or securities if, within a 61‑day period (30 days before to 30 days after the sale), the taxpayer acquires substantially identical stock or securities. The rule does not apply to losses incurred in a trade or business (for non‑corporate taxpayers) or to dealers in the ordinary course of business.
Sources
- [1]U.S. National Archives, Electronic Code of Federal Regulations — 26 CFR 1.1222-1 — Other terms relating to capital gains and losses · as of 2026-08-26
- [2]Cornell Law School, Legal Information Institute (26 USC) — 26 U.S. Code Section 1091 — Loss from Wash Sales of Stock or Securities · as of 2026-08-26
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