How Does the Wash Sale Rule Differ for Stocks versus Section 1256 Contracts?

The wash sale rule generally does not apply to Section 1256 contracts. This is because Section 1256 contracts are subject to the mark-to-market rule, which forces the recognition of all gains and losses at year-end, making the wash sale mechanism unnecessary.

However, the rule is fully applicable to standard stock and non-1256 option trades.