IRS Defines Wash Sale Rules for Vanguard S&P 500 ETF

The Internal Revenue Service set specific wash sale rules governing the trading of the Vanguard S&P 500 ETF on October 4, 2026. These rules clarify that a wash sale occurs when an investor sells at a loss within 30 days before or after purchasing a substantially identical security, according to IRS Publication 550. The rules also address cross-account wash sales, which occur when selling in a taxable account while an IRA reinvests dividends.

The clarification impacts how investors manage tax losses and dividend reinvestment strategies. When dividend reinvestment is active, the automatic repurchase can potentially negate a claimed tax loss, and cross-account wash sales permanently forfeit disallowed losses.