---
title: "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."
canonical: https://www.m-i-n-d.ai/minds/tax/capital-gains-short-vs-long-term-wash-sale-rule
jurisdiction: "US Federal"
last_verified: 2026-08-26
license: CC BY 4.0 — https://creativecommons.org/licenses/by/4.0/
attribution: "Source: MIND (m-i-n-d.ai)"
---

# 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.

Under 26 CFR §1.1222-1, short-term capital gains arise from assets held 1 year or less, and long-term gains from assets held more than 1 year. The wash-sale rule (26 U.S.C. §1091) disallows loss deductions if substantially identical securities are purchased within 61 days of the sale.

## 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 · https://www.ecfr.gov/current/title-26/section-1.1222-1 · 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 · https://www.law.cornell.edu/uscode/text/26/1091 · as of 2026-08-26