Section 1091 disallows losses on wash sales of stock or securities. A digital asset that is not stock or a security is not brought within §1091 merely because it is digital; if the asset is stock or a security, the analysis changes. The watch mark reflects both that classification boundary and the possibility of legislation changing the rule.
What the rule is, and why it currently misses
Section 1091 disallows a loss on a sale or disposition of shares of stock or securities when substantially identical stock or securities are acquired in the statutory window. The classification question comes first. IRS property treatment for digital assets does not itself answer whether a particular token is also stock or a security for §1091. If it is outside those categories, §1091 does not reach it merely because it is digital; if it falls inside them, the wash-sale analysis is different.
Why "not currently applied" instead of "exempt"
First, the words. An exemption is something the law grants. This is something the law's text fails to reach — a gap, not a grant. Gaps get closed by a sentence; exemptions get repealed by a fight.
Second, the pattern. Every session of Congress since 2021 has produced at least one bill extending wash-sale treatment to digital assets, and the proposal appears routinely in Treasury budget materials as a revenue-raiser. Nothing has passed. But a rule that the legislature repeatedly reaches for is not a settled feature of the landscape; it is a pending question with a current answer. The watch mark is that sentence compressed into one character.
Third, the neighbouring doctrine. Even with §1091 out of reach, a loss must still be real. The economic substance doctrine and the sham-transaction cases do not need the word "securities" to operate. A sale-and-instant-repurchase whose only substance is the deduction invites challenge on those grounds today — no new statute required. The gap in §1091 is not a promise that any loss, however choreographed, will stand.
The statutory words are a fact. The classification of the asset is the analysis. HolderTax publishes the boundary and refuses to turn it into a blanket crypto exemption.
What to keep on file either way
- Timestamps for both legs. Sale and repurchase, exchange records and chain data. If the rule changes with a hard effective date, the file proves which side of it you are on.
- The economic story of the interval. Price movement between sale and repurchase, however small, is what separates a real loss from a paper round-trip.
- Lot identification consistent with your method. A harvested loss lives or dies by which lot was sold — the same specific-identification discipline as on the 1099-DA page.
- Awareness of the effective-date question. Past proposals have varied on when the new rule would bite. A change enacted late in a year could reach transactions earlier in it. Anyone harvesting at scale should have a professional watching the bill text, not the headlines.
The one-line version
For a digital asset outside the stock-or-security classification, §1091 does not apply merely because the asset is digital. That is not the same as saying every digital asset is outside §1091, or that other doctrines cannot matter. Line 03 stays on watch until both classification and legislation are boring.
This is a position note about a rule in motion. It is not advice on any transaction, and reading it creates no professional relationship.