Worked example
Tax-Loss Harvesting Example with a Partial Wash-Sale Adjustment
Sam, a fictional single investor, is considering selling two losing funds while already holding short- and long-term gains in 2026. One planned replacement purchase may disallow part of a loss, so the headline market loss is not the usable tax input. This is an illustrative 2026 scenario, not personal tax advice.
10 minute read · 2026 U.S. federal tax
Follow the numbers
Subtract wash-sale disallowance
- 1Calculate potential loss
- 2Subtract wash-sale disallowance
- 3Allocate gain offsets, deduction, carryforward
The planning question behind the numbers
Sam, a fictional single investor, is considering selling two losing funds while already holding short- and long-term gains in 2026.
One planned replacement purchase may disallow part of a loss, so the headline market loss is not the usable tax input. The filing-status context is Single, and every tax value uses the 2026 production calculation.
Scenario profile
One planned replacement purchase may disallow part of a loss, so the headline market loss is not the usable tax input.
Sam, a fictional single investor, is considering selling two losing funds while already holding short- and long-term gains in 2026.
Single
Prepared inputs, grouped by role
Capital baseline
- $96,000 ordinary taxable income and $2,000 qualified dividends
- $7,000 current short-term gains and $4,000 current long-term gains
Selected positions
- technology fund: $20,000 basis, $13,000 proceeds, $100 costs, short term, $2,000 wash-sale disallowance
- bond fund: $16,000 basis, $12,500 proceeds, $50 costs, long term, no entered disallowance
Inputs the fictional taxpayer has prepared
The scenario uses the same inputs accepted by the calculator. No deduction, credit, basis amount, or eligibility conclusion is created inside the example.
- $96,000 ordinary taxable income and $2,000 qualified dividends
- $7,000 current short-term gains and $4,000 current long-term gains
- technology fund: $20,000 basis, $13,000 proceeds, $100 costs, short term, $2,000 wash-sale disallowance
- bond fund: $16,000 basis, $12,500 proceeds, $50 costs, long term, no entered disallowance
Follow the calculation from input to result
TaxArith passes the fixture through calculateTaxLossHarvesting. The values below use the site’s production formatting.
Production calculation journey
Values are generated by calculateTaxLossHarvesting.
calculateTaxLossHarvesting
- 1. Potential realized loss$10,650.00
- 2. Entered wash-sale loss disallowed$2,000.00
- 3. Allowed harvested loss$8,650.00
- 4. Capital gains offset$8,650.00
- 5. Additional carryforward created$0.00
- 6. Estimated current-year federal tax savings$1,654.50
The modeled benefit comes only after selling costs and the entered wash-sale adjustment reduce the usable loss, then capital netting determines where it can be used.
Change one input and watch the consequence
If the technology-fund loss is not disallowed and no replacement is expected:
Base case versus one changed input
If the technology-fund loss is not disallowed and no replacement is expected
Base case
Estimated current-year federal tax savings
$1,654.50One-input change
Alternative estimated tax savings
$2,087.50If the technology-fund loss is not disallowed and no replacement is expected
This is a facts comparison, not permission to ignore wash-sale rules; the replacement-activity review must happen outside TaxArith.
Before you use the estimate
- Recreate the example only with records that support your own inputs.
- Keep the same filing status and tax year when comparing the published numbers.
- Change one material input at a time and read the full breakdown.
- Review the stated limitations before using the estimate.
Where this estimate stops
- The example does not identify substantially identical property, inspect other accounts, compute replacement basis, value portfolio risk, or model future tax.
- The fictional facts illustrate production logic and do not establish eligibility, filing treatment, or a recommended action for any reader.
Sources and references
Only the primary federal sources used for the rules discussed in this guide are listed here.
- Topic No. 409, Capital Gains and Losses
Internal Revenue Service · General capital gain and loss character, netting, the annual capital-loss deduction, and carryover treatment.
- Publication 550, Investment Income and Expenses
Internal Revenue Service · Investment income, basis, holding-period, capital netting, and wash-sale concepts discussed in the guide.
- Instructions for Schedule D
Internal Revenue Service · Capital-loss netting, deduction, and carryover worksheet context.
- Instructions for Form 8949
Internal Revenue Service · Transaction reporting and adjustment context for realized investment sales.
TaxArith provides illustrative 2026 U.S. federal tax estimates for general information. It is not tax, legal, financial, or investment advice and does not prepare or file a return. Results depend on the accuracy and completeness of the submitted facts.