The Wash-Sale rule was created by the IRS to disallow the loss deduction from the sale of securities if repurchased by a seller or spouse within the Wash-Sale period.
The Wash-Sale period is defined as 30 days before and 30 days after the sale date, totaling 61 days (including the sale date). If the account purchased substantially identical securities within this period, the loss amount will be added to the newly purchased lot. This occurs regardless of the default tax method on the account (FIFO/LIFO) or if the sold position is matched with a specific lot purchase, (versus purchase (VSP) even if the lot was originally purchased more than 30 days before the sale.
Wash sale applies to stocks (long/short) and options. Dividend reinvestment (DRIP) and day trades will also trigger wash sales.
If you would like additional information about wash sales, please see IRS Publication 550.